Understanding and Evaluating Associateship Opportunities
Buy-in/Buy-out Issues

Course Author(s): David G. Dunning, MA, PhD;Robert D. Madden, DDS, MBA

Buy-in/Buy-out Issues

  1. Is the employer incorporated? If so, this will have significant tax implications if the associate ever buys into the practice. An experienced team with an attorney, accountant and practice transition consultant can help manage the tax implications.
  2. What is the value of the practice now? Has a valuation been done? Will the associate have to pay for any “sweat equity” built into the practice?
  3. If the value has been established prior to an associate working in the practice, can the owner adjust the value of the practice due to legitimate reasons, such as the fair market value of added equipment when the associate buys-into the practice?
  4. If the associate intends to buy or buy into the practice, it is in the best interest of both parties to include a contract section to that effect or an accompanying letter of intent addressing the option to purchase within a reasonable time framework—for example, 6-24 months after starting an associateship position.
  5. Are terms and conditions of the buy-in/buy-out clearly and specifically defined?
Buy-in/Buy-out Issues