Partner and Owner Agreements: What Healthcare Practice Owners Need to Get Right Early

Partnerships can be tricky. It’s true in life, and it’s especially true in business. We often tell clients to think about a business partnership like a marriage; starting with a strong foundation matters. You can have a strong, successful business partnership if you create a well-drafted partner or owner agreement from the very beginning. 

In healthcare practice partnerships, the tough conversations need to happen early–before money, growth, and the pressure of running a business change the dynamic between owners. If tension tests the partnership down the road, having a solid partner or owner agreement is a helpful safeguard for all parties. 

What Is a Partner or Owner Agreement?

Depending on how the entity is structured, this document may be called an operating agreement or a shareholder agreement.

• Operating agreements apply to LLCs and PLLCs

• Shareholder agreements apply to corporations and PCs

  
  

The terminology differs slightly. In an LLC, owners are referred to as members. In a corporation, they are shareholders. In practice, the purpose is the same. These agreements govern how owners operate, make decisions, and resolve issues within the business (hence the term “corporate governance” used to reference these agreements).

Once the agreement is finalized and signed, owners typically gain greater confidence knowing that if something unexpected occurs, there is a clear plan in place.

For healthcare practice owners, these agreements often work alongside broader compliance, ownership, and regulatory planning.

Ownership, Voting, and Decision-Making Authority

The first step in any owner agreement is identifying who the owners are and defining each person’s ownership percentage. From there, we address voting rights.

A common misconception is that voting power must always mirror ownership percentages. While that may be the default, it is not required. In some situations, it makes sense for one partner to have greater decision-making authority, even where ownership is equal.

We also distinguish between routine operational decisions and major business decisions. This distinction becomes increasingly important as practices expand, add locations, or take on financing.

For example, no one needs to vote on everyday expenses. However, purchasing a six-figure piece of equipment, financing major assets, entering long-term vendor contracts, or taking on debt should require clearly defined approval thresholds. The agreement should specify:

• Which decisions require a vote

• Whether approval must be unanimous or by majority

• Which decisions can be made by a manager or managing partner

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Clarity here prevents disputes and avoids surprises.

Buy-Sell Provisions: Planning for the Unexpected

One of the most critical components of any partner agreement is the buy-sell provision.

This provision addresses situations that no one wants to anticipate but everyone should plan for, including:

• The death of a partner

• Disability or incapacity

• A partner deciding to exit the business

  
  

Without a buy-sell mechanism, these events can create significant disruption, particularly when family members, courts, or creditors become involved.

We spend a great deal of time helping clients think through how these scenarios should be handled. In most cases, the goal is to allow the remaining partners to buy out the departing partner or their estate in an orderly manner.  A common approach to “funding” the buy-sell is to take out life insurance policies.  In the event of the worst, a deceased partner (or more appropriately, their estate), would be bought out using the agreed-upon life insurance proceeds.

Valuation is a key part of this discussion. Some groups prefer to assign a value at formation. Others opt to determine value at the time of the triggering event, often through independent appraisers. Each approach has advantages and trade-offs.

What matters most is having a clear, agreed-upon process that preserves stability and control.

Rights of First Refusal and Protecting the Ownership Group

Rights of first refusal are another foundational element of owner agreements. These provisions give the remaining partners the opportunity to purchase an owner’s interest before it is sold to a third party. This is particularly important in healthcare, where ownership restrictions, regulatory considerations, and operational expertise matter.

Most owners have no interest in waking up one day to discover they have a new partner who lacks experience or alignment with the practice’s mission. Rights of first refusal help ensure continuity and protect the integrity of the ownership group.

Dissolution and “Bad Actor” Scenarios

Every partner agreement should also address dissolution. Certain events may trigger automatic dissolution, such as fraud, illegal activity, or bankruptcy. Outside of those scenarios, partners may collectively decide that the arrangement is no longer viable and that it is time to go in separate directions.

The agreement should explain how dissolution decisions are made, how assets and liabilities are handled, and whether one partner has the option to buy out the others rather than wind down the business entirely.

These provisions often intersect with post-closing and wind-down issues we see in healthcare transactions.

Selling the Practice: Drag-Along and Tag-Along Rights

At Marti Law Group, we handle a significant volume of healthcare M&A transactions across dental, medical, veterinary, optometry, and aesthetic practices. That experience directly informs how we approach partner agreements.

Not every owner will want to sell at the same time. Drag-along and tag-along provisions address this reality.

• Drag-along provisions allow a majority of owners to proceed with a sale, even if one owner objects.

• Tag-along provisions protect minority owners by allowing them to participate in a sale initiated by others.

  
  

These provisions are especially important in multi-owner practices and DSO structures, where alignment can otherwise be difficult to achieve.

Capital Contributions, Profits, and Financial Expectations

Owner agreements should also clearly address financial matters, including:

• Initial capital contributions

• Capital calls when additional funding is required

• Allocation of profits and losses

• Maintenance of capital accounts

  
  

These issues frequently surface during diligence in a sale or recapitalization. Clear documentation upfront reduces delays and renegotiation later.

Liability Protection and Access to Financial Information

One of the primary reasons for forming an LLC or corporation is to limit personal liability.

The agreement should reinforce that owners are not personally responsible for business obligations, provided corporate formalities are respected. This concept ties directly into compliance and risk management for healthcare practices.

The agreement should also confirm each owner’s right to access financial records. Transparency builds trust and supports informed decision-making.

Build Your Partnership a Strong Foundation with Marti Law Group

Partner and owner agreements are not about expecting failure. They are about thoughtful planning.

A strong operating or shareholder agreement reduces risk, protects relationships, and makes future transitions and transactions more efficient. If you are considering adding a partner, restructuring ownership, or preparing your practice for an eventual sale, this is not a document to put off. Reach out to our team to get started.