What To Inquire With Dental Brokers Regarding Buy-Sell Agreements
| 03:04:00 |
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.
You need to ask what is the method for establishing the price for the buying and selling. This buy-out price is actually the most difficult clause that you will have to decide on. You have to consider whether this will be determined through appraisal or if there is a predetermined formula. You and your partner must both agree to this.
Ask what would happen when there are disputes over the shares or other major decisions regarding the practice. If possible, you might have to put a provision in the agreement regarding binding arbitration. This can be the mechanism on how to resolve disputes for major decisions. It can be less costly than going to court.
There are times when a partner might want to sell at least a partial interest of the share. As much as possible, there should be a restriction to whom a partner sells a part or all of his or her share. This is a restriction that should be put in place so that the remaining practitioner retains the right to decide who his or her future business partner will be.
You have to ask how all accounts receivables, vehicles, and liabilities are to be managed during the buy-out. There should be a specific stipulation regarding how these are handled so that there will be no confusion during the buy-out. The distribution of vehicles and other assets should also be cited in the agreement.
During the buyout, there needs to be a clear stipulation regarding the payout terms. There are many options that can be chosen for payout. There are times when it can be funded by an outside lending source. At times, it can be done in installments. A partner can also put collateral for the payout as an assurance.
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.
You need to ask what is the method for establishing the price for the buying and selling. This buy-out price is actually the most difficult clause that you will have to decide on. You have to consider whether this will be determined through appraisal or if there is a predetermined formula. You and your partner must both agree to this.
Ask what would happen when there are disputes over the shares or other major decisions regarding the practice. If possible, you might have to put a provision in the agreement regarding binding arbitration. This can be the mechanism on how to resolve disputes for major decisions. It can be less costly than going to court.
There are times when a partner might want to sell at least a partial interest of the share. As much as possible, there should be a restriction to whom a partner sells a part or all of his or her share. This is a restriction that should be put in place so that the remaining practitioner retains the right to decide who his or her future business partner will be.
You have to ask how all accounts receivables, vehicles, and liabilities are to be managed during the buy-out. There should be a specific stipulation regarding how these are handled so that there will be no confusion during the buy-out. The distribution of vehicles and other assets should also be cited in the agreement.
During the buyout, there needs to be a clear stipulation regarding the payout terms. There are many options that can be chosen for payout. There are times when it can be funded by an outside lending source. At times, it can be done in installments. A partner can also put collateral for the payout as an assurance.
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.
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