Structuring Strong Shareholder, Operating And Partnership Agreements For Medical And Dental Practices
Sansweet, Dearden and Burke, Ltd., has significant experience with buy-ins to medical and dental practices. SDB structures and negotiates such transactions on behalf of the practice or “senior doctor,” as well as on behalf of the person who is becoming a new practice owner. Our firm drafts the required documents, such as partnership agreements, shareholders’ agreements, operating agreements, buy-sell agreements and stock purchase agreements. SDB attorneys also draft and analyze documents for related entities, such as surgery centers and holding companies for real estate.
Types Of Business Agreements We Handle
We understand that well-structured agreements are the foundation of a successful medical or dental practice. Our attorneys draft and review a wide range of agreements tailored to the unique needs of health care professionals, including:
- Shareholders’ agreements for professional corporations, addressing voting rights, ownership transfers and dispute resolution.
- Operating agreements for medical and dental LLCs, defining governance structures and financial obligations
- Partnership agreements that provide clarity on roles, responsibilities, dispute resolution and profit-sharing
- Buy-sell agreements for practice transitions, providing clear terms for ownership changes, practice sales and acquisitions
Our lawyers tailor each agreement to protect your interests, minimize risk and promote long-term stability.
Key Considerations To Address
Important issues to be addressed in these documents include:
- Purchase price for ownership interest
- Payment terms
- Income tax treatment
- Net income division
- Governance and voting
- Indemnifications/guarantees
- Buy-out terms
Since we are very familiar with these types of transactions, we can not only make sure all the proper legal protections are in place, but we can also offer advice as to the practical business issues.
Common Pitfalls In Medical/Dental Practice Agreements
Even experienced practitioners can encounter challenges when agreements are poorly drafted. Common issues include:
- Inadequate valuation mechanisms for future buyouts, leading to disputes over fair market value
- Insufficient protection for minority shareholders or partners, which can result in loss of control or financial disadvantage
- Tax consequences of poorly structured agreements, which may create unexpected liabilities
- Compensation formulas that create practice discord, undermining morale and productivity
Addressing these pitfalls early can prevent costly litigation and protect the integrity of your practice.
FAQ About Health Care-Related Business Agreements
Below are common questions we receive about this area of our practice.
What’s the difference between an operating agreement and a shareholders’ agreement for medical practices?
An operating agreement governs relationships among members in a limited liability company, while a shareholders’ agreement applies to professional corporations.
How do buy-sell provisions protect both incoming and established doctors in a medical practice?
Buy-sell provisions should set clear terms for ownership transfers. They should establish a fair valuation and reduce disputes during retirement, disability or departure.
Get Help Building Effective Agreements
Whether you’re starting or acquiring a new practice, adding a new partner or restructuring ownership, our health law attorneys provide tailored solutions to keep your practice secure and thriving. Contact us online or by phone at 610-936-6889 to get started.