What are the key ingredients in partnerships?
There are a number of key ingredients in negotiating a successful partnership. Of course, the first assumption is that the doctors have been working together for a while and are compatible. The ingredients include: the percentage of the practice being sold, the price, the terms, how the income will be split, management of the practice and a method to value the practice for an eventual buy-out. A common issue is the determination of a fair price for an associate to pay for a buy-in. Generally, they want a discount for the revenue they generate. In many cases, a price reduction is done in order to complete a buy-in. The most important issue, however, is not the price but the income splitting. There are numerous methods of splitting the income. In many cases, the more successful methods have two elements; production and percent ownership. Owners of practices have dual roles: they are providers and should be compensated for their efforts at chair side; they are also owners of a business an
