Aspiring dental practice owners may consider dental associate buy-ins to established practices. Essentially what happens is a dental professionals interested in expanding their careers and working towards being a dental practice owner can connect with a dental practice that is already operational. Then, the dental professional can buy a percentage of ownership or completely buy the existing practice. The buyer will either enter into a partnership agreement with the current owner or they will buy them out.
There are many benefits of an associate buy-in, which is why they happen so frequently. First, there is the advantage of joining an existing practice with an established reputation in the community. A novice dentist working alongside a more seasoned provider can mentor them and help them improve their clinical skills while also learning how to run the business. The costs of running the business, from paying for equipment to paying staff, can be shared, thus reducing the overhead. A transition from one dentist to the next taking over can happen much more smoothly than if a buy-in was not done. Also, older dentists getting ready to retire, can feel more secure knowing that their practice is in good hands and their patients will be well taken care of.
There are many financing options for a dental practice buy-in. A dentist can secure a conventional bank loan, the selling dentist may offer to finance, personal savings or investments can be cashed out and used, forming partnerships with dentists or other investors, Small Business Administration loans can be acquired, or a combination of these methods may be appropriate.
Though for an associate buy-in to have the greatest chances for success preparation and planning must be done. Likewise, a structured and comprehensive buy-in agreement must be made. When a solid agreement is in place it can keep everyone on the same page and reduce the risk of legal disputes arising in the future that can affect the practice.
A buy-in agreement has many elements that it is necessary to address, but the most important that cannot be left out include the following:
- Allocation of practice profits and income for partnered dentists.
- Describe the responsibilities that each dentist will have and how exactly they will contribute to running the practice.
- Buy/sell provisions because buy-in terms are just as important as buy-out terms.
- Should one dentist become incapacitated or die, then this will impact the practice. An agreement must be made about what to do in an unexpected situation like this.
- Restrictive covenants are critical in the event of a buyout or a partnership failure that requires termination.
Speak to an Attorney at Leiva Law Firm Today
Dental associate buy-ins can be effective and help a practice and the practitioners thrive. However, to avoid legal issues from adversely impacting the a dental practice, having the right agreement in place is key.
Contact the Leiva Law Firm today if you would like help with a dental associate buy-in. You can schedule a free consultation with a California associate buy-in attorney by calling (818) 519-4465.
