Dental Practice transitions come in many forms. The practice transfer, no matter the form, is undoubtedly the most important transaction that a dentist will experience in his or her career. The dental practice is the client’s “golden egg.” The business is almost always the most valuable asset the dentist owns. And, likewise, if purchasing shares in a practice, or buying a practice outright, such a transaction will be the most significant purchase in the life of the buying dentist.
Yes, there is a right and a wrong form to apply to a dental practice transition. It is essential that dentists rely on a lawyer experienced in dentistry transfers to help sort through the situation, and recommend the correct legal structure (and consult with the parties’ accountants to optimize tax efficiency). Accountants that focus their services on dental practice transfers can often design a purchase or buy-in scheme that functions to the best interests of both buyer and seller. Then, it’s up to the lawyers to prepare a series of documents to formalize the transactions. Business mergers, transfers, and acquisitions can be very complex legal processes. Dental practice transfers include their own unique circumstances – after all dentistry is an exclusive industry with very specific jargon, business customs, and operational nuances.
Below are some common forms of practice transitions:
- Partnership buy-in (a new dentist buys into an existing dentistry);
- Outright practice purchase (could be asset purchase; equity purchase; or some combination of both);
- Associate employment agreement with option to purchase;
- 2nd location / office purchase (existing practice desires to expand);
- Merger (between two partnerships or multiple dentists);
- Owner financed practice sale or partnership buy-in.
Of course this is not an exhaustive list, but ordinarily the transition falls under some variance or combination of the above noted transfer forms. Whether you are the buying dentist or selling dentist, it is important to choose the appropriate form with the help of an experienced attorney. It is important to receive guidance on whether to buy shares or assets; whether to owner finance through internal partnership distributions, or standard promissory note payments, if at all. It is important to have thorough partnership agreements in place that deal with the division of collections and practice operation specifics to ensure the transition period is smooth, transparent, and free of dispute. It is important to incorporate non-compete and non-solicitation provisions that will hold up under law.
Ultimately, it is hard to emphasize enough importance with respect to hiring an experienced dental attorney – not just with ordinary business purchase agreements – but with dental practice transitions! The excellent legal representation provided by Lake Norman Law Firm will save money, stress, and provide the security the dentist requires during this important life-changing event.