Expense Share Buy Out Care Case Study
Having a well drafted expense share or partnership agreement in place pays dividends as our involvement with a dental practice in Huddersfield, West Yorkshire shows.
Our first involvement with this particular practice was to advise the two principal dentists on the need for a well drafted expense share agreement.
As such we visited the Practice for an initial fact find and consultation to discuss how the Practice had been running, what concerns the ladies had about its future operation and their plans for the future.
From those discussions we were able to draft an agreement which set out how the ladies wanted the profits and costs of the Practice allocated, what contributions were expected from each towards the clinical and managerial demands of the Practice and, crucially, clear procedures in the event that one of the ladies wanted to retire, died or suffered long term ill-health. (From our initial fact find one of the ladies indicated that she may well have plans in the next 5 to 10 years to retire, given she was the elder of the two principals).
Several years later we were called back into the Practice to assist with the purchase by one of the ladies of the other’s share in the Practice following a decision by the elder principal to retire. The ladies then followed the procedures laid down in the Expense Share Agreement. As part of this the ladies were able to consult PFM’s Sales & Valuation Team to discuss valuation issues and with their expert help and assistance, an agreed price was swiftly obtained. (Further details concerning PFM Dental’s expert valuation services can be found at https://pfmdental.co.uk/practice-sales/practice-valuation/
In the course of the sale and purchase we were able to assist with:-
- The security requirements of the Buyer’s lender;
- Transfer of the NHS Contract held by the retiring principal;
- Removing the elder principal from the current CQC registration and registering the continuing principal as a sole trader
- The assignment of the current lease to the continuing principal
- The drawing up of a final set of Expense Sharing Accounts to determine the final liability for costs between the principals
The existence of an agreed Expense Share Agreement allowed the Sale and Purchase Agreement in the “buy-out” to be undertaken easily as several key areas (including non-compete clauses) had already been agreed and set out in the Expense Share Agreement.
Fixed fees
For both the work involved with the preparation of an expense share agreement and the “buy-out” we were able to agree a fixed fee for our work, allowing our clients certainty over the fees to be incurred and to allow them to budget for the transactions.
