This typically would allow the senior partner to keep the corporation's name, tangible assets, location and charts upon a mutually agreed upon split-up for some period of time. It may also give the senior partner the right to make a final decision when there is a deadlock on certain governance issues. The junior partner should attempt to negotiate an end to such rights after a reasonable period of time, perhaps five years. Another way for the senior partner in a two physician practice to maintain control is to sell less than 50 percent of the stock. When representing the junior partner, I almost always push for fifty percent.
Equal ownership is the norm in medical practices, at least after the buy-in is complete.
Structuring the buy-in is usually the most important part of the partnership arrangement. The tangible assets may be appraised, but more often, a modified book value approach is used. Pure book value may result in little or no value if a lot of the assets are more than five years old. The new partner is either expected to pay the other partners up-front for the stock or allowed to pay over a few years with interest. The selling partners report any gain on the sale of the stock as capital gain.