Items That Should Be Addressed in a Partnership Agreement

125 Items Across 11 Sections

This checklist does not determine whether the document is good or bad. It is not legal, tax, accounting, or financial advice, and it is not a negotiation script or list of demands. It is a review tool to identify whether major partnership issues are addressed clearly enough for the parties to understand their obligations. Partners should consult a qualified attorney and CPA before finalizing any partnership agreement. Mark Yes when the item is addressed clearly and specifically. Mark No when the item is not addressed. Mark Not Clear when the item appears to be addressed but the language is vague, incomplete, ambiguous, or needs additional explanation. Any No or Not Clear item should be addressed in writing before the document is finalized.

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PARTIES, ENTITY, AND OWNERSHIP

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1The legal entity used for the partnership is identified.

2All partners or owners are identified by correct legal name.

3Each partner's ownership percentage is stated.

4Each partner's capital contribution is stated.

5The timing of capital contributions is stated.

6The agreement states whether ownership can be held through an entity or trust.

7The agreement states whether spouses or community property issues are addressed if relevant.

8The agreement states whether ownership percentages can change.

9The agreement states how ownership changes are approved.

10The agreement states whether dilution can occur and under what conditions.

PURPOSE AND SCOPE

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11The business purpose of the partnership is stated.

12The practice locations covered by the agreement are identified.

13The services, specialties, or business activities covered by the partnership are stated.

14The agreement states whether future locations are included automatically or require separate approval.

15The agreement states whether real estate is included or separate.

16The agreement states whether management services, DSO activities, or non-clinical businesses are included.

17The agreement states whether partners may participate in outside dental businesses.

18The agreement states whether the partnership owns branding, websites, phone numbers, and marketing assets.

GOVERNANCE AND DECISION RIGHTS

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19Voting rights are stated.

20Major decisions requiring unanimous approval are listed.

21Major decisions requiring majority approval are listed.

22Day-to-day management authority is stated.

23The agreement states who has authority to bind the partnership.

24The agreement states who controls bank accounts.

25The agreement states who approves budgets.

26The agreement states who approves debt.

27The agreement states who approves capital expenditures.

28The agreement states who approves hiring and firing of key employees.

29The agreement states who approves associate compensation.

30The agreement states who approves payer participation.

31The agreement states who approves fee changes.

32The agreement states who approves marketing strategy and spending.

33The agreement states who approves new locations, acquisitions, or major expansion.

34The agreement states who approves sale of the business or major assets.

CLINICAL AND OPERATIONAL RESPONSIBILITIES

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35Each partner's expected clinical role is stated.

36Each partner's expected schedule is stated.

37Each partner's management responsibilities are stated.

38The agreement states how administrative duties are assigned.

39The agreement states whether any partner receives separate management compensation.

40The agreement states how vacation, leave, and reduced schedules are handled.

41The agreement states how call, emergency coverage, or after-hours responsibilities are handled.

42The agreement states how temporary disability, reduced clinical capacity, or extended medical leave affects compensation, duties, and distributions.

43The agreement states how clinical standards and protocols are set.

44The agreement states how disputes over clinical philosophy are handled.

45The agreement states how malpractice, board, or patient complaints involving one partner are handled.

COMPENSATION AND DISTRIBUTIONS

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46Partner compensation formula is stated.

47The agreement states whether partners are paid equally, by production, by collections, by ownership, or another method.

48The agreement states whether hygiene exams, specialist production, capitation, or ancillary revenue are included in compensation.

49The agreement states whether owner-doctors are paid before profit distributions.

50The agreement states how profit distributions are calculated.

51The agreement states whether tax distributions are required.

52The agreement states when distributions may be made.

53The agreement states how taxable income, losses, credits, K-1s, and tax obligations are allocated among partners.

54The agreement states whether reserves must be maintained before distributions.

55The agreement states who decides distribution amounts.

56The agreement states how losses are allocated.

57The agreement states whether personal expenses are allowed or prohibited.

58The agreement states how partner benefits, insurance, retirement contributions, cars, phones, and other perquisites are handled.

CAPITAL, DEBT, AND GUARANTEES

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59The agreement states whether additional capital contributions may be required.

60The agreement states how capital calls are approved.

61The agreement states what happens if a partner cannot or does not fund a capital call.

62The agreement states whether partner loans are allowed.

63The agreement states interest, repayment, and priority for partner loans.

64The agreement states whether the partnership may borrow money.

65The agreement states who may approve debt.

66The agreement states whether partners must personally guarantee debt.

67The agreement states how a departing partner is released, indemnified, or protected from personal guarantees and debt obligations.

68The agreement states how guarantees are allocated among partners.

69The agreement states required malpractice, life, disability, key-person, or business overhead insurance if applicable.

RECORDS, REPORTING, AND ACCESS

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70The agreement states how accounting records are maintained.

71The agreement states who selects the CPA or bookkeeper.

72The agreement states how often financial statements are provided to partners.

73The agreement states partner rights to inspect books and records.

74The agreement states who receives bank access or view-only access.

75The agreement states how budgets are prepared and approved.

76The agreement states tax return preparation and approval process.

77The agreement states how financial errors or disputes are corrected.

78The agreement states whether related-party transactions must be disclosed.

79The agreement states how management fees or intercompany charges are handled if relevant.

TRANSFERS, BUY-SELL, AND EXIT

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80The agreement states whether a partner may transfer ownership.

81The agreement states consent requirements for transfers.

82The agreement states rights of first refusal or first offer if a partner wants to sell.

83The agreement states a buy-sell mechanism.

84The agreement states valuation method for buyouts.

85The agreement states whether valuation uses EBITDA, collections, appraisal, formula, book value, or another method.

86The agreement states whether discounts apply for minority interest or lack of marketability.

87The agreement states payment terms for buyouts.

88The agreement states whether buyout payments may be made over time.

89The agreement states whether departing partners keep any accounts receivable, patient rights, or goodwill value.

90The agreement states what happens if a partner voluntarily withdraws.

91The agreement states what happens if a partner is terminated for cause.

92The agreement states what happens if a partner loses a license or permit.

93The agreement states what happens if a partner becomes disabled.

94The agreement states what happens if a partner dies.

95The agreement states whether life or disability insurance funds buyout obligations.

DEADLOCK AND DISPUTES

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96The agreement defines deadlock.

97The agreement states how deadlocks are resolved.

98The agreement states whether mediation is required for certain disputes.

99The agreement states whether arbitration or court litigation applies.

100The agreement states whether a tie-breaker, rotating control, shotgun, put-call, or other mechanism applies.

101The agreement states whether temporary operating authority exists during a dispute.

102The agreement states whether partners must continue funding obligations during a dispute.

103The agreement states who pays attorney fees or costs in disputes.

104The agreement states confidentiality obligations during disputes.

105The agreement states whether public disparagement or staff disruption is prohibited during disputes.

RESTRICTIVE COVENANTS AND CONFIDENTIALITY

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106Any non-compete obligation is stated with duration, geography, and scope.

107Any non-solicitation of patients is stated with duration and scope.

108Any non-solicitation of employees is stated with duration and scope.

109Any non-solicitation of referral sources is stated with duration and scope.

110Confidentiality obligations are stated.

111The agreement states ownership of patient records.

112The agreement states ownership of phone numbers, websites, domains, and social media.

113The agreement states whether departing partners may use case photos, patient testimonials, or before-and-after images.

114The agreement states whether departing partners may announce their departure and how.

115The agreement states continuity of care and patient notification process after partner departure.

SALE, EXPANSION, AND SUCCESSION

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116The agreement states approval requirements for selling the practice.

117The agreement states whether drag-along rights apply.

118The agreement states whether tag-along rights apply.

119The agreement states how offers from DSOs or buyers are evaluated.

120The agreement states whether all partners must sell if a qualifying offer is accepted.

121The agreement states how sale proceeds are allocated.

122The agreement states approval requirements for new locations.

123The agreement states approval requirements for bringing in new partners.

124The agreement states succession planning for retirement.

125The agreement states whether family members may inherit ownership or only economic rights.

A downloadable, interactive version is available on the Publications page at DDS Private Capital.

This checklist is for educational purposes only and is not legal, tax, accounting, or financial advice. Partners should consult a qualified attorney and CPA before finalizing any partnership agreement.