Dentists who are practicing on their own business with a partner should consider drafting a buy-sell agreement. Since there is a partner to the practice, this agreement settles everything when one or both partners die, leave, retire, or become disabled. You can ask dental brokers Columbus Ohio for help in this matter. To have a clear understanding of this, here are things to ask the broker about.
First, better ask if this purchase is optional or if this will become required during a triggering event. For death and disability, you will most possibly want the purchase to be required during a triggering event. The exception for this purchase which will make it option would be when the partner leaves or retires from this business.
You have to ask clearly what the definition of permanent disability is. This should be a condition that is clearly spelled out in the agreement. In the case of this agreement, the best condition is when one is already disabled for 12 months and there is no clear expectations for one's return anytime soon. This is then presumed as permanently disabled.
Ask regarding the method on how to establish the price for the buy and sell transaction. It is required to have a buy-out price and the buy-out price might just be the most difficult item in the agreement to decide on. Consider if the buy-out price is to be determined via appraisal or if you will follow a predetermined formula for it.
The partners might have some disputes in their practice, especially with regards to some major decisions. To prevent things from possibly escalating further, it is highly recommended to cite in the agreement to have a binding arbitration for it. This will become the mechanism for resolving the disputes cheaply than going to a court of law.
You have to ask if either of the partners can sell a partial interest of their shares. Truthfully speaking, you might want to restrict this. Make a stipulation to whom the partner may sell part interest or all of the shares in this practice. This way, you still have a choice of who will become your business partner in this practice.
Every business will have accounts receivables, debts, equipment, and vehicles. In the agreement, it should stipulate clearly how the practice's debts and accounts receivables are to be handled upon buy-out. For the equipment and vehicles, it should be clearly cited how they are to be distributed between the partners involved in the said practice.
You have to ask more on the payout terms. You must have a definite understanding on what the payout terms are so that the transaction becomes easier for both the parties involved. It can be in installment payments or you can have an outside lender fund the buy-out. You can also use a collateral to guarantee the buy-out.
Ask if it is okay to have a restrictive covenant provision. There are terms in the restrictive covenant provision, especially regarding future interactions with the practice. The partner selling shares should be asked to sign this reasonable restrictive covenant. Your plans will be affected greatly by this covenant so think carefully before signing the said agreement.
First, better ask if this purchase is optional or if this will become required during a triggering event. For death and disability, you will most possibly want the purchase to be required during a triggering event. The exception for this purchase which will make it option would be when the partner leaves or retires from this business.
You have to ask clearly what the definition of permanent disability is. This should be a condition that is clearly spelled out in the agreement. In the case of this agreement, the best condition is when one is already disabled for 12 months and there is no clear expectations for one's return anytime soon. This is then presumed as permanently disabled.
Ask regarding the method on how to establish the price for the buy and sell transaction. It is required to have a buy-out price and the buy-out price might just be the most difficult item in the agreement to decide on. Consider if the buy-out price is to be determined via appraisal or if you will follow a predetermined formula for it.
The partners might have some disputes in their practice, especially with regards to some major decisions. To prevent things from possibly escalating further, it is highly recommended to cite in the agreement to have a binding arbitration for it. This will become the mechanism for resolving the disputes cheaply than going to a court of law.
You have to ask if either of the partners can sell a partial interest of their shares. Truthfully speaking, you might want to restrict this. Make a stipulation to whom the partner may sell part interest or all of the shares in this practice. This way, you still have a choice of who will become your business partner in this practice.
Every business will have accounts receivables, debts, equipment, and vehicles. In the agreement, it should stipulate clearly how the practice's debts and accounts receivables are to be handled upon buy-out. For the equipment and vehicles, it should be clearly cited how they are to be distributed between the partners involved in the said practice.
You have to ask more on the payout terms. You must have a definite understanding on what the payout terms are so that the transaction becomes easier for both the parties involved. It can be in installment payments or you can have an outside lender fund the buy-out. You can also use a collateral to guarantee the buy-out.
Ask if it is okay to have a restrictive covenant provision. There are terms in the restrictive covenant provision, especially regarding future interactions with the practice. The partner selling shares should be asked to sign this reasonable restrictive covenant. Your plans will be affected greatly by this covenant so think carefully before signing the said agreement.
No comments:
Post a Comment