Instead, you need a structure to divide shareholders in the event of immobility. The structure should focus on exiting shareholders, not on the details of their day-to-day relationship. Sometimes a clear exit, including mutually assured destruction, encourages shareholders to get along better. Cooperation is easier when the alternative is so expensive. Future Expansion / Financing – In the event that a practice acquire another practice or within a few years after a buyback a significant supervision of the debt, it is important to recognize such an investment. Care must be taken to avoid a scenario in which a shareholder has reduced its profit in a given year to finance the acquisition, but is repurchased before the investment is recovered. More importantly, how does the shareholder contract approach the following scenario: two doctors are investing $100,000 in a new site. Instead of borrowing, they reduce their income by $500,000 a year. One of them dies in the next year and the practical value is strongly influenced by the balance sheet. How do you compensate the heirs for the previous year`s income declines and withdrawals from that investment? While each situation is different, one way to mitigate this problem is to obtain external funding to finance such efforts. This does not alleviate all problems, but part of the equation is dealt with.
As a general rule, a shareholders` pact deals with three main themes: the value of receivables can also be an integral part of the valuation. Is the value of the receivables fixed at full value or is it discounted for recovery capacity? Some firms carry millions of dollars in unproductive debt or “irreducible” debts such as receivables on their books, and a newcomer should not be expected to have to buy these excessive “assets.” The value of receivables is particularly important in oncology, as high bills for expensive drugs processed through the practice`s cash flows are continued. If the amount of receivables is used as part of the overall assessment, make sure that your own contributions to receivables (while you were employed) are not included. A good accountant will understand these issues, but not all lawyers do, so you should have an accountant and a lawyer working together, or a lawyer with experience in this area. While each situation is different, one way to mitigate this problem is to obtain external funding to fund expansion efforts. This does not reduce all problems, but part of the equation is dealt with. Similarly, care must be taken to avoid a scenario in which a shareholder reduces its profit in a given year to finance the acquisition, but which is repurchased before the investment is recovered. If you pay the buy-in amount for a certain period of time, the agreement must indicate the interest rate, frequency and duration of your payments. Talk to your accountant about the tax impact of your depreciation agreement.
Whether it`s an experienced advisor, lawyer or accountant when it comes to designing a shareholder contract, it`s a good choice to hire someone with experience in these areas. An experienced advisor can help stakeholders conclude a fair and equitable contract. However, while most firms have competent legal advice that can assist shareholders in their agreements, not all experts have a good idea of the nuances of medical practices.