My boss is offering me a partnership buy-in. How do I know if I am getting a good offer?
Looking for advice!
Thanks, Dr. KAnswer:
Dr. K, glad you asked. Too many of your colleagues sign on the dotted line without understanding that partnership is not always the best track. Due diligence is not just recommended before agreeing, but should be considered necessary and required. For many, prior to engaging in partnership they have served as an employee or independent contractor, in most cases with fairly straightforward contractual arrangements and limited exposure (limited to ramifications of their own wrongdoing). With great power comes great responsibility! I may be a bit melodramatic there, but certainly the concept of "partnership" does imply certain authority that may not have been authorized previously. However, many of you reading may be thinking to yourselves that often a title doesn't translate to more authority or say. That's true too.
So, to get to the grit of the answer, since this forum is not meant to bore, I recommend seriously considering the following factors as to whether or not you have been presented with a good offer (and, before I get there, make sure you hire a competent healthcare attorney AND healthcare accountant to assist you in this process! KEY!):
- review practice financials - what are you taking on? Debt? What kind? How much? Is the practice profitable? (review with accountant!) - boss refusing to disclosure? Refuse to sign!
- terms of partnership - are you actually getting a right to vote on actions of the entity? What power will you have? Can you sign checks? Do you get a credit card? Are you being given a work vehicle? Does your boss now need your consent to get a new phone system or fire the office manager? Get specific! What are you getting?
- Monetary factors - understand what you will be making as a partner v. what you are paying in for partnership!!! Does it make sense.
- Restrictions - what are you giving up for the heightened role as partner? Can you moonlight? Work outside the partnership?
- End game - how can you get out once a partner? How can your partner(s) get out? MAKE SURE YOU ARE NOT BEING OFFERED PARTNERSHIP TO SERVE AS SOMEONE ELSE'S RETIREMENT PLAN!!!!
The above list is certainly not exhaustive - but a good start for the evaluation process. This is not a DIY job! You must work with competent counsel to ensure you are protected. Here, the devil will be in the details so make sure to read everything prior to signing.
Contact Jennifer with partnership questions/issues - Jennifer@Kirschenbauemsq.com
; (516) 747-6700 x. 302. Protect your Practice from "Surprise Bill" disputes. CLICK HERE for OON Disclosure Forms. (All orders in March 2015 will be processed at the reduced fee of $315.)