Nothing is wrong, and that is what makes the conversation so hard to have. In a six-partner group, four partners have concluded that a fifth simply does not belong there anymore. She meets her clinical obligations. She has broken no rule, triggered no compliance provision, and given nobody an enumerated ground for anything. She also blocks every decision, litigates every meeting, and has cost the practice two associates who left rather than keep working alongside the friction. The agreement has a for-cause provision that does not reach her and a deadlock provision that does not apply. So the practice has two options: endure the situation indefinitely, or manufacture a cause and hope it survives. Both are expensive, and one of them is worse than expensive.
A forced buyout provision is the lawful third option. It grants a supermajority of the partners the right to require another partner’s exit without cause, at a price the agreement sets in advance. Read cold, that power sounds alarming, and in a badly drafted agreement it is. Read carefully, it is the provision that keeps an unworkable partnership from becoming a lawsuit, and it protects the partner it removes more reliably than the alternatives do.
Everything depends on four design decisions.
The first is the threshold. Set it at a supermajority of the other partners—75 percent or higher is the working setting—with the affected partner excluded from both the vote and the denominator. A simple majority is not a governance provision; it is a standing invitation for whichever faction can count to three. And as with every threshold in an agreement, translate the fraction into names before adopting it, then re-run the arithmetic at every admission and departure. The same 75 percent that requires four of five partners requires two of two in a group that has shrunk.
The second is price, and the premium is the heart of the provision. A forced exit is priced at the agreement’s formula value plus a stated premium, commonly 10 to 25 percent. The premium does double duty, and it is worth understanding both halves. For the departing partner, it is compensation for the involuntary nature of the exit: she did not choose the timing, she did not price the market she is entering, and she is absorbing a career disruption the practice initiated. For the remaining partners, it is the price of the safety valve—a lawful, quantified way out of a partnership that no longer functions, available without accusing anyone of anything. A premium set high enough to be felt is what keeps the mechanism from becoming a cheap way to settle a personality dispute. A provision with no premium is a governance risk dressed as a governance provision.
The third is everything around the price, which the governance dataset packages as four elements that travel together: the premium, due process, payout terms no worse than a voluntary exit’s, and covenants applied at the gentler tier. That last element follows from simple logic. The departure was the practice’s decision, so the practice should not also get the fuller restriction it would impose on a partner who left to compete. Due process here means a written statement of the grounds, notice, and a meeting at which the partner may respond—not because a no-fault exit requires justification in the way a for-cause exit does, but because a provision exercised in silence looks like exactly what its critics say it is.
The fourth is the anti-abuse architecture, and it is the part most agreements omit. Require that the price come from a current signed valuation rather than one produced after the decision, so the majority cannot set the number and the trigger in the same meeting—which is one more reason the annual valuation re-signing belongs on the calendar. Require written grounds, even where cause is not required. Prohibit the provision’s use in retaliation for a partner’s exercise of rights the agreement or the law grants her, including compliance reporting and any protected activity, and let counsel draft that carve-out precisely. Add a cooling-off period between the vote and the effective date, long enough for the ordinary human possibility that the partnership repairs itself. And bound the aggregate exposure with the annual buyout cap, which limits total buyout payments to a stated percentage of collections, so a forced exit cannot be initiated at a moment the practice cannot fund it.
Where the equity goes is the provision’s last piece, and it belongs to the transfer machinery of article 44. A right of first refusal and a general prohibition on transfers without partner approval keep the vacated interest inside the room, rather than in the hands of whoever the departing partner would most like to seat at the table on her way out.
Forced buyouts also appear in a second setting, and the two should not be confused. When equal owners deadlock, the terminal mechanisms are the shotgun clause and the appraisal-based forced buyout. Under a shotgun, one partner names a single per-unit price and the other must either buy at that price or sell at it within a fixed window. Its elegance is self-enforcing honesty, and its known flaw is capital asymmetry: the partner with family money can name a fair price knowing the partner with student debt cannot finance the buy side, which converts the mechanism into a one-way eviction. Three patches exist for exactly that, and an agreement carrying a shotgun clause should carry all three—a six-to-nine-month financing window, an installment-payment option, and a price floor at a stated percentage of the last signed annual valuation, where 80 percent is workable. The gentler alternative many groups now prefer is the appraisal-based forced buyout, in which a coin flip or a neutral designates who exits and the agreement’s own formula prices it. Article 17 carries the deadlock ladder in full.
Two closing cautions. First, the valuation formula is doing all of the work in every scenario above, which means an agreement with a stale or undefined formula does not have a forced buyout provision at all—it has a lawsuit with a schedule attached. The companion textbook, Pediatric Practice Management: The Fundamentals, works the valuation methodology in full. Second, whether a particular forced-buyout provision is enforceable as drafted depends on state partnership and professional-entity law, on the fiduciary duties partners owe one another in that state, and on how the provision was exercised in the specific case. Those are counsel’s questions, and the time to ask them is while the clause still describes nobody.
Red flags. A simple majority sufficient to force a partner out, which is minority-partner exposure written into the constitution. No valuation premium, so the involuntary exit is priced identically to the voluntary one. No right of first refusal, leaving the vacated equity’s destination unresolved. Transfer restrictions so severe they block legitimate estate planning while doing nothing about the actual risk. And no anti-abuse protection at all, so the first time the provision is used, it is used to settle a grudge.
A forced buyout provision can protect the practice or abuse a partner. The difference is in the drafting.
Where the agreement grants that right, yes. A forced buyout provision gives a supermajority of the other partners, with 75 percent or higher the working setting and the affected partner excluded from both the vote and the denominator, the right to require an exit without cause, at the agreement's formula value plus a stated premium.
Commonly 10 to 25 percent above the agreement's formula value. The premium does double duty: it compensates the departing partner for an exit she did not choose or time, and for the remaining partners it prices the safety valve. A premium set high enough to be felt is what keeps the mechanism from settling personality disputes cheaply.
One partner names a single per-unit price and the other must either buy at that price or sell at it within a fixed window. Its known flaw is capital asymmetry, so an agreement carrying one should also carry three patches: a six-to-nine-month financing window, an installment-payment option, and a price floor at a stated percentage of the last signed annual valuation.
The Partnership Agreement Analyzer scores an existing agreement against the framework this series is built on — or schedule a discovery call to work through it with PMI. The full framework, with the arithmetic, lives in the textbook Pediatric Practice Management: The Fundamentals.