In our last blog post, we talked about how DSOs are becoming more popular in the US, and the efficiencies and growth opportunities created by utilizing the DSO model. We also provided you with a few resources to help you analyze what you want to build, and why.
Today, we are going to walk you through the legal infrastructure of a “typical” (impossible to define) DSO in the context of how to engage Stock Legal for these services. This will give you a sense of the steps forward from a legal perspective. In future posts, we will delve into all the details about this legal infrastructure.
Step 1– Introductory call with Stock Legal: We spend that time learning about your business, goals, and growth strategy.
Step 2– Engage Stock Legal: If we are doing fixed fee work for you, we will send as an attachment to our standard engagement letter a Schedule of Services breaking out the fixed fee services and set price.
Step 3– Draft documents: We start working with you (in person or by phone/video) to build out your DSO structure. That basic DSO structure often consists of: 1. DSO Entity Organizational Documents; 2. Management Services Agreement; 3. Employment Agreement and 4. Award Agreement. We can work in parallel on all of these documents (and typically do). The professionals involved in this process include your lawyer, your accountant (ideally familiar with DSOs) and your transaction advisor.
Step 4– Finalize the DSO structure and associated agreements: Once we have customized each of these agreements to your specific needs and structure, we finalize them and send them to you for signature.
If you’re feeling a little overwhelmed by all the legal jargon in this post, do not worry! That’s completely normal, and we are here to help. The next three blog posts in this series will discuss: What are “DSO Entity Organizational Documents”? What does a “Management Services Agreement” do and how do you use it? What is the point of an “Employment Agreement” and how does it work with an “Award Agreement”? All of your questions will be answered soon . . . stay tuned!
If you’re considering a DSO and want more information or legal counsel, please contact us! We’re prepared to meet your timeline.
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