Buyout Agreement for Plastic Surgeons – 6 Essential Tips to Ensure a Smooth Transition

In a plastic surgery practice, ownership changes can happen for many reasons. Things like retirement, relocation, career shifts, or a business divorce between partners are among the most common. Whatever the cause, a well-crafted buyout agreement ensures the transition is fair, efficient, and protects both the practice and the departing surgeon.

Without a solid buyout agreement, disputes can escalate, patient care can be disrupted, and the financial health of the practice can suffer. Here’s what every plastic surgeon should know before signing or negotiating a buyout.

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1. Understand the Purpose of a Buyout Agreement

A buyout agreement spells out the terms under which a partner can exit the practice, including how ownership shares are valued, how payment will be made, and what restrictions will apply after departure.

A buyout agreement can be initiated by either the departing partner or the remaining owners, depending on the situation. In some cases, it’s a mutual decision where both parties agree it’s time for a transition. Regardless of who starts the process, having the terms in writing ensures the exit is handled professionally and without unnecessary conflict.

Key functions of a buyout agreement may include:

• Preventing disputes over the practice’s value – By setting a clear valuation method, you avoid arguments and uncertainty when a partner decides to leave.

• Ensuring a fair process for both parties – The agreement lays out step-by-step how the buyout will work, protecting both the departing and remaining partners.

• Setting a clear timeline for the transition – Outlining when payments will be made, when responsibilities will shift, and when the departing partner’s involvement ends keeps the process smooth and predictable.

An experienced business attorney can help you ensure everything is set up fairly and adequately for whatever your situation.

2. Determine the Valuation Method

The valuation method is the formula or process used to determine how much the exiting partner’s share of the practice is worth. It sets the foundation for the buyout price and can have a significant impact on whether the deal feels fair to both parties. In a plastic surgery practice, valuation often can include intangible assets like reputation and patient loyalty.

Common approaches include fixed-price agreements decided in advance, formulas based on revenue or profit, or independent third-party appraisals.

Things to consider:

• Whether the valuation method reflects the true earning potential of the practice

• How patient lists, goodwill, and intellectual property such as branding and treatment protocols will be valued

• How debts and liabilities are factored in to avoid surprises later

An accurate valuation may also involve input from your estate planning, tax planning and financial planning advisors to ensure the numbers align with your long-term financial goals.

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3. Structure the Payment Terms

Payment structure can make or break a deal. Lump sums offer immediate closure, while installment payments can ease financial strain for the remaining partners.

Some options may include:

• Lump-sum buyouts

• Installments over a set period

• Hybrid arrangements with an upfront payment plus installments

Your payment terms should align with your legal structure and business entity to optimize tax treatment and cash flow.

4. Address Non-Compete and Non-Solicitation Clauses

To protect the practice’s patient base, referral network, and reputation, buyout agreements often include post-departure restrictions. These can include:

• Geographic limits on where you can practice after leaving

• Time limits that specify how long the restrictions apply

• Non-solicitation rules that prevent reaching out to the practice’s patients, staff, or referral sources

When crafted carefully, these clauses safeguard the practice without unreasonably limiting your ability to continue your career. But when written too broadly, they can spark disagreements during or after the buyout process - sometimes escalating into a partnership dispute. Reviewing these terms before you sign ensures the agreement protects both the practice and your professional future.

5. Plan for Asset and Liability Division

Beyond ownership shares, the agreement should address how physical assets, intellectual property, and outstanding debts will be divided.

Examples include:

• Surgical equipment and office furniture

• Branding, logos, and marketing materials

• Leases, loans, and vendor contracts

This is also the time to coordinate with your asset protection and estate planning strategies to safeguard your personal wealth.

6. Prepare for the Unexpected

Life and business can change quickly. Your buyout agreement should anticipate scenarios such as disability, death, or a partner’s loss of license.

These clauses can:

• Trigger automatic buyouts

• Provide funding mechanisms, such as insurance policies

• Minimize disruption to patient care and practice operations

A well-prepared buyout agreement is one of the best safeguards for your career. Connect with our business attorney for legal guidance.

Key Takeaways for Plastic Surgeons

Before signing a buyout agreement, review it with a qualified attorney who understands both medical practices and business law. Be sure it covers:

• Clear valuation methods

• Fair payment terms

• Reasonable non-compete restrictions

• Comprehensive asset and liability division

• Protection against unexpected events

FAQs About Buyout Agreements for Plastic Surgeons

What is a buyout agreement in a plastic surgery practice?
A buyout agreement is a legally binding contract that outlines how a partner can exit a plastic surgery practice. It covers how the practice will be valued, how and when payment will be made, and any post-departure restrictions, such as non-compete or non-solicitation clauses. Having these terms in writing prevents misunderstandings and ensures a smooth, fair transition.

How is a plastic surgery practice valued in a buyout?
Valuation methods can include a fixed price set in advance, a formula based on revenue or profits, or an independent third-party appraisal. In plastic surgery, valuations often account for intangible assets such as goodwill, patient lists, brand reputation, and proprietary treatment techniques, in addition to physical assets and equipment.

Can I negotiate my buyout agreement?
Yes. Many elements of a buyout agreement - including valuation methods, payment timelines, non-compete restrictions, and asset division - are negotiable. The earlier you review the terms, the more leverage you have to shape an agreement that supports your career and financial goals.

Why do I need an attorney for a buyout agreement?
A business attorney ensures your buyout agreement is clear, enforceable, and tailored to your specific situation. They help you understand the legal and financial implications, avoid clauses that could limit your future, and align the agreement with your broader plans for retirement, asset protection, and career growth.