Dental Partnership Checklist

Like a marriage, the early days of a dental partnership can be exciting and new, with each participating dentist working together to build the foundation of a long term relationship. Unfortunately, like many marriages dental partnerships often end in divorce, and if the partners have failed to adequately plan for the day their “marriage” comes to an end, that divorce can be an ugly, emotionally draining experience that will cost both partners a small fortune and have a negative impact on the value of the practice. A successful dental partnership is one that has been well thought out in advance with concrete, written procedures that act as a “pre-nuptial” agreement as to how the dental partnership will be dissolved in the event the partners can no longer work together.



The following is a “Dental Partnership Checklist” that any dentist should review prior to engaging in discussions with another dentist regarding a dental partnership.

1.     Cultural Fit, Practice Philosophy and Partnership Objectives: A dentist once described his partner’s work as “fast food dentistry” while he practiced “fine dining dentistry”. Before entering into any dental partnership, you need to be sure you share the same values as your partner, that you approach practicing dentistry in a similar manner, and that you are on the same page in terms of practice goals, time horizon, and financial needs.

2.     Duties, Compensation, and Benefits: One of the most significant areas of tension we encounter in dental partnerships is the failure of one partner to meet expectations regarding the amount of time expected to dedicate to the practice. A dentist recently approached us about exiting a partnership. He had joined another dentist in a practice, only to find out a short time later that the partner dentist opened another office and therefore couldn’t dedicate the amount of time expected to the partner practice. Be sure to put in writing what each partner’s duties, compensation and benefits will be for and from the dental practice. While each partner is an owner, they should also be treated as an employee, with defined duties, compensation, and benefits. Any failure to satisfy those duties and obligations should trigger real consequences, such as a buyout right by the other dental partner.

3.     Contributions of Capital and Distributions from the Dental Partnership: Be sure to clearly define who is contributing what to the dental practice, and how each partner will be compensated. Will each partner dentist receive compensation based on a formula? How will the remaining profit be split up? What if there is a loss at the end of the year, who and how will it be made up? These are only a few of the many questions to be answered regarding how the dental practice income will be allocated and distributed. Each unique partnership arrangement requires careful thought and specific planning to ensure the partners intention is carried out in the event of a disagreement or change in circumstances.

4.     Management Authority and Dispute Resolution: Who makes the decisions in your dental practice may be driven by economics. If you are a young dentist buying in to an existing dental practice, management control may be something you cede to the elder dentist, but for “50/50” dental partnerships this can be a touchy subject. What happens if you don’t agree on buying a major piece of equipment, remodeling the office, or opening a second location? Providing clear authority for day-to-day management and a concrete written procedure to resolve disputes regarding more significant financial and management issues can save a dental partnership. There are a myriad of methods to resolve disputes so be sure to ask your attorney what is best for your dental partnership.

5.     Exiting the Partnership: One of the most challenging circumstances to address legally in most dental practices that are structured as “50/50” partnerships is clearly defining the method and terms of an exit. The easy situations to deal with are death, disability and retirement, where triggers are generally definitive and valuation formulas can be applied in a straightforward manner. The real challenge is the case where the partners just don’t get along anymore and can’t agree on a way for one partner or the other to exit. Most advisors fail to address this most important issue, but it can be the most costly both financially and professionally. With some careful forethought and frank discussions facilitated by your legal, tax and financial advisors you can avoid this pitfall.

While all of the above matters are important to address in any dental partnership, the most important is to get it in writing! All the best planning amounts to nothing years down the road if you fail to get your partnership agreement in writing so you, your advisors, or, in the worst case scenario, a court or arbitrator can refer to it in issuing a decision in your partnership dissolution. You may think you are saving a few bucks by making a handshake deal, but it will cost you thousands down the road if you end up in a dispute with your partner.

Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his expertise as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. This blend of legal and business experience provides Mr. Uditsky with unique insight into his client engagements, which in addition to dentists also includes a variety of corporate and transactional matters, real estate, and commercial finance. Mr. Uditsky grew up in a dental family, with his father, grandfather and sister each owning their own dental practices.