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Physician Practice Buy-Sell Agreement

When it comes to running a successful physician practice, one important aspect that must not be overlooked is the buy-sell agreement. A buy-sell agreement, also known as a buyout agreement, is a legally binding contract that outlines the terms and conditions under which one or more owners of a business can sell their shares to the remaining owners or to a third party.

In the context of a physician practice, a buy-sell agreement can help to ensure the continuity of the business and protect the interests of the remaining owners if one or more partners decide to sell their shares or leave the practice for any reason. Here are some key points to consider when drafting a buy-sell agreement for your physician practice:

1. Identify the triggering events: The buy-sell agreement should clearly spell out the events that will trigger the buyout, such as retirement, disability, death, or voluntary departure.

2. Determine the valuation method: The buy-sell agreement should specify the method for valuing the practice. This may include using a multiple of earnings, appraising the practice`s assets, or using a combination of both.

3. Decide on the funding source: The buy-sell agreement should also identify the source of funding for the buyout. This may include the use of insurance proceeds, the practice`s cash reserves, or a loan from a financial institution.

4. Plan for the future: The buy-sell agreement should also address the future of the practice, including succession planning and the admission of new partners.

By having a well-written buy-sell agreement in place, physician practices can ensure that they are well-prepared for any unexpected events that may occur in the future. In addition, a solid buy-sell agreement can help to minimize potential conflicts among owners and protect the practice`s financial stability. As such, it is important for physician practices to work with an experienced attorney who can help draft a buy-sell agreement that meets their specific needs and goals.

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