Provided by: Jennifer Kirschenbaum, Esq.
October 24, 2019
Our partnership had its operating agreement written years ago. We have some numbers set for buy out. We probably need it updated but I'm not sure how to do that, or what the new numbers should be. What do you think? What are next steps?
The first step is to understand what the construct in place is currently. We would assess the standing agreement and discuss the status of the existing buy out structure. Once we know the lay of the land we can discuss whether a restructure is advisable. Going on what you are telling me that set numbers are in the agreement and value of a practice certainly can fluctuate, there are a few scenarios that may come to play on adjustment. Since there are a few partners, or at least more than 1, the numbers may have been set for a reason. I'll need to know that reason and also understand if any change to the agreement requires a consensus to change. If so, wanting and effectuating change are two very different things. Generally I see a formula for buy out and not set numbers. So, if there was no rhyme or reason to setting specific numbers, then, without seeing more, it's likely I'll recommend we make a change. That being said, a change may be a simple amendment, or based on what you send over, you may need a whole rewrite. I will need to see the document to give a full answer.
Great question. Do not put this off until the time you think you or a partner may be invoking the provision...