Contractual considerations in the private equity era

Abstract

Private equity (PE) has grown rapidly in medicine. The reintroduction of PE in ophthalmology has necessitated a greater understanding of the potential contractual relationships with PE firms from both a practice owner and an employee physician perspective. There are contractual obligations that need to be met as PE agreements are designed to ensure clear investment patterns and abide by legal mandates. A practice owner entering into a PE contract needs to consider how the practice is being valued, what their obligations are to the PE entity after the sale has been completed to attain full compensation and understand their new role at the practice. On the other hand, employee ophthalmologists must carefully evaluate the compensation package being offered in terms of the type of equity, vesting of shares, obligations to the PE firm under the agreement such as a noncompete clause, and what occurs under a subsequent sale of the practice. Overall, contractual considerations in the private equity era need to be carefully evaluated in order to ensure the agreement is in the best interest for the clinician, practice, and their patients.

Editorial: Private equity investment and ophthalmology: why the discussion matters

“…Shah and Wolfe [19] provide the reader further insights on how the private equity model achieves a return on investment. Williams [20] delves into important considerations that should be evaluated in deciding whether to sell to private equity, whereas Patel and Nijm [21] highlight contractual considerations. Chang and Pearlman [22] as well as Donnenfeld [23] offer perspectives on how their recent practice acquisitions have affected clinical research programs and business operations, respectively.…”