Click to Print

How do we structure future partner agreements (financial and voting) in a new pediatric urgent care center with three founders who are equal partners?

We are three physicians about to open a pediatric urgent care center. This is a startup venture and, as the practice grows (with new locations and additional physicians), how do we reward ourselves for the true equity and sweat equity involved in getting the practice off the ground? We know we will only attract quality physicians if we offer some form of partnership, but we do not feel they should be financially equal partners with us three. How can we structure this?
Nina Kaufman answered September 4, 2008
URL: http://www.entrepreneur.com/answer/221602
Professional limited liability companies, limited liability partnerships and professional corporations/associations can permit you to structure different tiers of ownership interests.

You can create one class of ownership interests that controls the management and profits of the business, while having other classes that share a lesser percentage of management and profit. This would enable the founding partners to receive the recognition (and compensation) they are seeking, while carving out a portion of the pie for other partners to share.

However, the different legal forms have different requirements that depend on the laws and legal forms of business available in your state. Be sure to consult with an attorney in your state who is familiar with professional practices.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.