Under the existing setup, AAA shows no profit annually as all practice profits are fully distributed among partner doctors. In a partnership with SMP, partner physicians would share the same overhead percentage as associate physicians. In this scenario, partner physicians would receive a valuation of $5,000,000. The partners aim to retain 30% ownership, with SMP entering as a 70% partner. Upon agreement, partners would receive a cheque representing 70% of the business’s value, amounting to $3.5M. Additionally, they would receive the remaining $1.5 million in SMP/AAA Cardiology shares, which are poised to appreciate as the network expands.

In this instance, physicians currently receiving $5,000 per month or $60,000 annually would get a lump sum payment of $700,000. They would still retain 30% ownership and partake in any annual dividends from that share. Looking ahead, as the SMP network expands nationwide, the value of partner shares is expected to increase. Our projections indicate share value could grow by more than 25% annually over the initial 10 years.

When physicians at AAA decide to retire, SMP will assist in finding suitable replacements who align with AAA’s culture. Younger physicians will agree to purchase shares from retiring physicians at increased values, providing departing physicians with additional funds for their retirement plans. SMP will assist the younger physicians in the purchase to assure a smooth transition.

Author: Michael Black, Chief Executive Officer, Specialty Medical Partners