The dental attorneys at Nardone Limited in Columbus, Ohio often assist dental clients with partnership formations. Whether dentists are forming a new dental practice from scratch, or an associate dentist is buying-in to an existing solo practice, there are a number of planning steps that must be taken, and legal documents that must be prepared, to ensure that the doctors lay the necessary foundation for the partnership. The dental attorneys at Nardone Limited can help doctors navigate the complexities of forming a partnership, and have vast experience preparing the appropriate legal documents, such as a partnership agreement and a buy-sell agreement.
The cornerstone to a successful partnership, from a legal standpoint, is the partnership agreement—which is known as an operating agreement if the dental practice is formed as a limited liability company. The partnership agreement governs each owning doctor’s financial rights, responsibilities, duties, and obligations with respect to the operation of the dental practice, and regulates the doctors’ relations among themselves. For instance, how will the dental practice’s net profit be calculated and defined? How will distributions of that net profit be calculated, and when will distributions be made? What actions will require unanimous consent versus majority vote? Will the partners be subject to non-compete and non-solicitation covenants? These questions, and many others, are addressed in a well-drafted partnership agreement.
It is important for partners to plan for the future, and to consider—at the beginning of the relationship—what will happen to their ownership interests in the dental practice upon the occurrence of certain life events, such as death, permanent disability, divorce, retirement, bankruptcy, or termination of employment. A buy-sell agreement typically addresses the disposition of a partner’s ownership interest in each of the above scenarios, or any other “triggering event” that the partners agree to. Generally, the occurrence of a “triggering event” will cause the affected dentist to sell his interest to the remaining partner(s), or to the dental practice, at either a pre-determined purchase price, or using a pre-determined formula to determine the purchase price. A buy-sell agreement may also impose restrictions against transferring a partner’s ownership interest, and provide for a right of first refusal in the event a partner desires to sell his interest to another dentist.
Contact Nardone Limited
If you are starting a new dental practice with a partner, or are buying-in to an existing dental practice, the experienced dental attorneys at Nardone Limited will assist you and your practice to ensure you are setting the proper legal foundation for a successful partnership. If you would like more information regarding your dental practice partnership, contact Nardone Limited.