Timeline . This specifies the soonest and latest time you can exercise your option to purchase . For example , you might have to work for one year before you have the right to exercise the option and then you have one year after that before your option expires . Without a timeline specified , your purchase option is just an offer , not a legal contract .
What is being bought . It may sound basic , but more often than not , purchase options fail to specify what exactly the buyer has the right to buy . At a minimum , specify a percentage of the practice that you want to be able to buy , but we also suggest including any other items such as management rights . You don ’ t want to think you ’ re buying into a 50 / 50 partnership with 50 / 50 say in the practice ’ s decisions , and then realize that your purchase option only means you get at least 1 %, or that you are relegated to nonvoting status .
We understand that it can be difficult to initiate these conversations and negotiations because you are essentially saying “ I don ’ t know if I ’ ll even end up exercising this option in the future , but if I do , these are the terms that I want / need .” We hear people say they choose not to have these conversations with the owner of the practice because it is awkward and if the owner doesn ’ t honor the vaguely worded purchase option in the future , they wouldn ’ t want to be a partner anyways . Although this rationale is common , broaching this topic now allows you to know whether you want to come work at this practice in the first place . Often an opportunity to work at a practice that includes a purchase option requires that you move your family to a new ( and distant ) community , decrease your salary , and make other sacrifices . Why make these sacrifices without the peace of mind knowing you ’ ll be able to buy into the practice on acceptable terms ? Otherwise , you might end up in an expensive and lengthy legal battle just to become a partner of a practice that you don ’ t even really want to be a partner in .
Joseph McGregor handles most of McGregor & Oblad ’ s dental startups , acquisitions , partnership matters , employment contracts , and other business-related transactions . His education emphasized corporate law , and his professional background is in larger business transactions involving sophisticated commercial acquisitions and real estate arrangements . Joseph McGregor holds a B . S . in Finance and graduated from the law school at Brigham Young University . Joseph is a native of Salado , Texas . He has a wife and five kids – and an unhealthy passion for college football . Send email to : jmcgregor @ mcgregorfirm . com .
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Jeremy Brown JD , Joe Piazza DDS , Terry Watson DDS , & Frank Brown JD
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