Internal Succession

Posted by dcjack on February 21, 2010 under Articles |

Without question, the most prominent form of veterinary succession planning evidenced in our offices lately has been the introduction of a new associate in the practice to an equity position.  Having “groomed” the next generation of practitioner for a number of years, the current practice owner or ownership group introduces a new owner to the clinic through a partial ownership arrangement.  Such a transaction is typically completed with some form of “re-organization agreement” wherein the parties agree on the fundamental terms of price and percentage of ownership; sometimes, the current practice owner offers to finance a portion of the purchase.  The key legal document though is the ownership agreement (a “Partnership Agreement” in a general partnership or a “Shareholder Agreement” for a corporate practice) which comprehensively deals with the administration of the clinic, the continuity of ownership and some form of dispute resolution.  We are seeing a number of these types of arrangements as opposed to outright sales of the entire practice although those transactions remain active.