Practice Buy-ins & Partnership Agreements

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Practice Buy-ins & Partnership Agreements

The formation of partnerships can be a complicated matter. No two deals are the same as the structure and terms of a partnership vary with each dental practice and the expectations of the various partners. We work with our clients to tailor a customized partnership structure and supporting agreements to operationalize that structure.

“Buy-Ins” involve the purchase of an interest in the dental practice and all of the liabilities that come with it. Because of this, when representing a dentist buying into a practice, it is imperative that the sale agreement contain proper representations and warranties, as well as strong indemnification language that protect the buyer. In addition, a dentist that is buying into a practice needs to ensure that he/she will have an adequate flow of patients to ensure that he/she has adequate income and will be able to make the loan payments on the loan that he/she took out to “buy-in” to the practice.

From a seller’s perspective, there are also a number of issues that need to be addressed with a “buy-in.” One common and fundamental issue surrounds the financing of the deal as the buyer’s lender will be requiring a first lien on the practice’s assets. Dealing with this issue can be tricky as the seller’s once unencumbered dental practice may now have a lien against it. What happens if the buyer defaults on that lien and the bank seeks to foreclose on the practice’s assets? Can the seller buy back his or her partnership interest? Moreover, challenges can arise where the seller has a balance on a loan to the practice (maybe in connection with the purchase of the practice or the start-up costs in the case of a de novo) and the buyer’s lender is now requiring a first lien position on the practice’s assets. Our team of professionals understands the importance of dealing with these issues properly to protect your interests.