Business Services, Dental

Dental Partnership Agreements: What to Settle Before You Sign

November 8, 2024

Reviewed by Erik Newton, Esq., on October 8, 2026.

Most dental partnerships start well. Two dentists who respect each other’s work agree on a price, shake hands, and get back to patients. The problems arrive years later: one partner wants to slow down, another wants a second location, someone gets divorced, someone gets hurt. At that point the only thing that matters is what the partnership agreement says, and too often it says very little.

If you are bringing an associate into ownership, buying into an established practice, or forming a group with colleagues, this is the guide I would want you to read first. It walks through the decisions a dental partnership agreement has to make, in roughly the order you will face them. (Throughout, “partnership agreement” means whatever governs the owners: a shareholder agreement for a professional association, an operating agreement for an LLC.) For how we handle these engagements, see our Partnership page.

Partner, associate, or buy-in: decide what you are actually doing

A partnership is not the only way to work alongside another dentist, and it is the hardest one to undo.

An associate arrangement keeps ownership with one dentist. The associate is paid under an employment or independent-contractor agreement and has no vote, no equity and no share of the practice’s debt. If you are not sure the relationship will last, this is usually where to start. (See essential legal clauses for dental associate agreements.)

A buy-in moves an associate into ownership over time. The owner sells a minority or equal interest, often in stages, and the agreement sets the price and the path.

A partnership from day one suits two or more dentists forming or acquiring a practice together, each bringing capital and patients.

The test is simple. If you would not be comfortable with this person having a vote on your lease, your equipment budget and your exit, you are not ready to be partners yet.

Pick the entity before you draft the terms

Florida generally limits ownership of a dental practice to licensed dentists, so the owners of the entity need to be dentists. Within that limit, most practices choose between a professional association (PA) and a professional limited liability company (PLLC). Florida allows only a licensed dentist, or a professional corporation or limited liability company composed of dentists, to own and operate a dental practice (s. 466.0285, Fla. Stat., as of October 2026).

What matters at this stage is less the label than three consequences. First, liability: a general partnership can leave each partner exposed to the other’s practice debts, while a PA or LLC generally limits that exposure to the entity. No entity protects you from your own malpractice. Second, taxes: the entity and its tax election drive how profit is taxed and paid out, so owners commonly bring their CPA in before the agreement is drafted. Third, the governing document: a PA runs on bylaws and a shareholder agreement, an LLC on an operating agreement. The clauses below belong in whichever one you have.

Buy-in price and how it gets paid

The buy-in price is usually a percentage of a practice valuation, but two questions decide whether it is fair: what is being valued, and how the buyer pays.

Settle what is in the price. Is the incoming partner buying a share of goodwill only, or also equipment, receivables and the real estate? Many practices keep real estate in a separate entity and sell it, if at all, on its own terms.

Then settle payment. Common structures include cash at closing (usually bank-financed), a seller note paid over time, or a combination in which part of the price is earned through reduced compensation. Each needs terms for interest, security and what happens to the unpaid balance if the new partner leaves early. (More on bringing a partner into your dental practice.)

Profit and compensation splits

This is where most dental partnerships break, and it is worth getting specific.

Production-based compensation pays each owner on what they produce or collect, after a share of overhead. It rewards the harder worker and tolerates different schedules, but it needs clear rules on how new patients and hygiene production are assigned.

Equal splits pay owners by ownership percentage regardless of production. They are simpler and build a team culture, and they breed resentment the first year one partner works noticeably less.

Many practices use a hybrid: a base split by production, with profit above that divided by ownership. Whatever you choose, the agreement should define “production” and “collections” precisely, say how overhead is allocated, and say what happens when a partner cuts back to part time.

Governance and decision rights

Write down who decides what. Day-to-day clinical and staffing decisions may sit with a managing partner. Larger decisions should require a vote: taking on debt, signing or renewing a lease, opening a location, admitting a new partner, selling the practice.

Name the voting threshold for each category. With two equal owners, every major vote is a potential deadlock, so the agreement needs a deadlock mechanism: a tiebreaker adviser, mediation, or a buy-sell trigger as the last resort. (See why a strong operating agreement matters.)

Capital calls

Practices need money after the buy-in too: new technology, a build-out, a slow quarter. The agreement should say when the owners can be required to contribute more, by what vote, and what happens if one partner cannot or will not pay. Typical answers are dilution of the non-paying partner’s interest or a loan from the paying partner on stated terms. Leaving it silent invites a fight at the worst moment.

Buy-sell triggers

The buy-sell section is the heart of the document. It should name each triggering event and say, for each one, whether the buyout is mandatory or optional, who buys, at what price and on what payment terms.

Death. The practice or the surviving partner buys the interest from the estate, typically funded with life insurance owned for that purpose.
Disability. Agreements commonly define disability, set a waiting period, and align it with the definition in any disability buy-out insurance policy so the policy actually pays.
Retirement. Agreements commonly require advance notice and allow a staged transition, so patients and staff move with the practice.
Voluntary departure. Price and terms are often less favorable than for retirement, to discourage a partner from leaving early and opening nearby.
Termination for cause. Agreements commonly list the causes and the process.
Divorce. A spouse can end up with a claim to the economic value of an interest. The agreement should force a buy-back of any interest that lands with a non-dentist.
Loss of license. A dentist who becomes legally disqualified must give up all financial interest in the practice entity (s. 621.10, Fla. Stat.). The statute sets no buy-back deadline, so agreements usually fix the timing and the price.

Valuation method in the buy-sell

A buy-sell price agreed in the abstract, before anyone wants out, is far more reliable than one negotiated after. Most agreements pick one of three approaches: a fixed price the partners update each year, a formula (for example, a multiple of a defined earnings figure), or an independent appraisal under a stated standard of value. Each has a weakness. Fixed prices go stale when nobody updates them. Formulas can reward or punish timing. Appraisals take time and money. Whichever you choose, say who pays for it, whether different triggers use different prices, and how the price is paid out. (See understanding dental practice valuations.)

Non-competes between partners

A departing partner who opens down the street can take a meaningful share of the practice with them. Partner-level non-competes and non-solicitation clauses address that. Florida enforces reasonable restrictive covenants that protect a legitimate business interest, and the time and area need to fit the practice (s. 542.335, Fla. Stat.). Florida’s CHOICE Act (effective August 15, 2025) does not apply to dentists, because it excludes licensed health care practitioners. Covenants between dentist-owners remain governed by s. 542.335 (ss. 542.43, 542.45 and 456.001(4), Fla. Stat., as of October 2026). (See non-compete agreements for dentists in Florida.)

Dispute resolution and exit

Agreements commonly settle up front how partners will resolve disagreements: a meeting requirement, then mediation, then binding arbitration or court. Arbitration is private and often faster; court preserves appeal rights. Either way, many agreements add confidentiality and a rule that patient care and payroll continue during a dispute.

Exit also covers the whole practice. Address a sale to a DSO or another buyer: what vote approves it, whether a minority partner must go along on the same terms (drag-along), and whether a minority partner can join a sale the majority negotiates (tag-along).

Dental partnership agreement checklist

Entity type, ownership percentages and who may own
Buy-in price, what it includes, payment terms and security
Compensation formula, definitions of production and collections, overhead allocation
Part-time and reduced-schedule rules
Management roles and voting thresholds by decision type
Deadlock mechanism
Capital calls and consequences of non-payment
Buy-sell triggers: death, disability, retirement, departure, cause, divorce, loss of license
Valuation method, payment terms and insurance funding
Non-compete and non-solicitation between partners
Dispute resolution sequence
Sale of the practice, drag-along and tag-along rights
Real estate held separately and its lease to the practice

FAQ

Do we need a written agreement if we are friends? Yes. Friendship is what makes the hard conversations uncomfortable later. A written agreement lets you have them now, while you still agree.

Can we use a template? A template can show you the headings. It will not know your compensation model, your real estate or your exit plans, which are the clauses that decide disputes.

Should the buy-in price and the buy-sell price use the same valuation? Not necessarily, but they should be consistent. A partner who buys in at one method and is bought out at a very different one will feel it.

What if we already have an agreement? It is common to review it against the checklist above, especially the buy-sell triggers and valuation method. Many older agreements are silent on disability, divorce and capital calls.

Before you sign

A dental partnership agreement is a plan for the hard years, written during the easy ones. If you are considering a buy-in, bringing in a partner or reviewing an agreement you signed years ago, the usual starting point is the checklist, with each item settled with the future partner before the documents are drafted. When you are ready to put it in writing, schedule a partnership consultation.