Partnerships in veterinary practices can be incredibly rewarding, as they allow for sharing the workload, combining skill sets, and building something meaningful together. But just like any professional relationship, not all partnerships last forever. Whether due to retirement, relocation, disagreements, or unforeseen personal circumstances, it’s not uncommon for one partner to want out. That’s where a well-crafted exit clause becomes essential.

At Mahan Law, we help veterinarians across the country structure partnership agreements that account for both the highs and lows of business ownership. In this post, we explore why exit clauses matter and what you should include to protect your practice—and your peace of mind.

Why Exit Clauses Matter in Veterinary Partnerships

An exit clause outlines what happens when one partner decides (or is forced) to leave the practice. Without clear terms in place, the departure of a partner can lead to confusion, conflict, and expensive legal battles.

Common triggers for a partner’s exit include:

Retirement or disability
Sale of ownership interest
Relocation or change in career
Irreconcilable disagreements
Death of a partner

Exit clauses help clarify everyone’s rights and obligations if one of these events occurs. When thoughtfully drafted, they preserve the stability of the business and ensure a fair outcome for all involved.

Key Elements of a Veterinary Practice Exit Clause

Buy-Sell Provisions

A buy-sell agreement is the heart of any exit plan. It determines who can (or must) buy out the departing partner and how the price will be determined.

Buy-sell provisions should include:

Triggering events: Define when a buyout is allowed or required.
Valuation method: Decide whether the buyout price will be based on a fixed formula, appraisal, or third-party valuation.
Funding method: Spell out how the purchase will be paid (e.g., lump sum, installments, use of insurance).
Right of first refusal: Give remaining partners the chance to buy the departing partner’s interest before it’s sold to someone else.

This helps avoid unwanted ownership changes that could disrupt the practice’s operations.

Non-Compete and Non-Solicitation Clauses

When a partner leaves the practice, you may not want them setting up shop across the street or taking key clients and staff with them.

Your exit clause should include:

A non-compete that restricts the former partner from opening a competing clinic within a certain radius and time period
A non-solicitation clause preventing them from recruiting your clients or employees

To be enforceable, these restrictions must be reasonable and tailored to protect the legitimate interests of the practice.

Dispute Resolution Mechanisms

Sometimes, even with a solid agreement, partners don’t see eye to eye. Including a mechanism for resolving disputes can avoid litigation and preserve working relationships.

Options include:

Mediation
Arbitration
Mandatory negotiation periods

Dispute resolution clauses can be especially helpful when one partner feels forced out or disagrees with the valuation.

Continuity Planning

It’s critical to plan for how the practice will continue if a partner were to exit. Questions to address include:

Will the practice continue with the remaining partners?
Will the business structure need to change (e.g., from a partnership to an LLC)?
Are there restrictions on bringing in a new partner?

A smooth transition protects patients, staff, and the clinic’s overall reputation.

Common Pitfalls to Avoid

Many veterinary partnerships lack a formal exit clause or have one that’s vague or outdated. Some common problems include:

Using a fixed valuation that no longer reflects the practice’s worth
Failing to update the agreement when a new partner joins
Omitting language about who can purchase the exiting partner’s interest
Not planning for incapacity or sudden death

These gaps can lead to delays, costly disputes, and disruptions in patient care.

When to Draft or Review Your Exit Clause

The best time to create an exit clause is before you need it. Ideally, it’s built into the original partnership or operating agreement. However, if you’re already in business with partners, it’s not too late to update or revise the agreement.

Situations that call for a review of your exit terms include:

Adding or removing a partner
Rapid growth or changes in business value
Relocation or retirement discussions
Ongoing disagreements

By being proactive, you reduce the risk of turmoil down the line.

Set the Stage for a Graceful Exit

Veterinary partnerships are built on trust, but trust alone isn’t enough when the unexpected happens. Exit clauses offer clarity, fairness, and protection when one chapter ends and another begins.

At Mahan Law, we help veterinary professionals create partnership agreements that reflect both their business goals and the realities of practice ownership. Whether you’re starting a new partnership or refining an existing one, we’ll help you put strong terms in place so that if the time comes to part ways, you can do it on your terms. Contact us today for your free consultation.