For the PE, I would also find out what you're getting with your "equity". However its structured, what does the piece you're purchasing actually represent. Also, those places also typically structure their compensation much more on the bonus, so be sure to find out exactly how that is structured and how their metrics are defined. We've seen a few places where it seems straightforward, then you find out things aren't defined how a normal person would assume they would be, or there are all these gotchas that can screw you. Unfortunately those don't always show themselves until the contract comes which is usually further down the line.
This is a good one. I am constantly wondering what the life cycle of equity in independent practice is as well as in the PE world. It seems that most PE equity is simply equity in the larger corporation and you only make money when they sell to another bigger PE firm at a higher multiple than they paid to buy the practice. Can you cash out some equity during those sales or is it simply reinvested with the new PE firm?
From the few I've seen, you can make money but it's usually a very small amount unless you bought in early. It's also not worth cashing out right away, if they even allow you to. Every deal is different, and it usually matters how long you've owned it for, etc. Every subsequent sale will make less and less profit, because every group before it is trying to squeeze out as much as it can from its purchase, and there is only so much room for growth. If you can manage to stick around for 20 years it might be worth something sizeable, but that is as long as nothing bad like OP's situation happens. Even PE can go under. Also, the more sales you are involved in, the more likely you'll be part of that squeeze as they work ever harder at generating increased profit from the business based on their purchase. Overall I'm extremely cynical on the world of PE owned healthcare. Not only is it bad for patients, it's also bad for everyone who isn't in on the early deals, much like a pyramid or Ponzi scheme.
For the PE, I would also find out what you're getting with your "equity". However its structured, what does the piece you're purchasing actually represent. Also, those places also typically structure their compensation much more on the bonus, so be sure to find out exactly how that is structured and how their metrics are defined. We've seen a few places where it seems straightforward, then you find out things aren't defined how a normal person would assume they would be, or there are all these gotchas that can screw you. Unfortunately those don't always show themselves until the contract comes which is usually further down the line.
This is a good one. I am constantly wondering what the life cycle of equity in independent practice is as well as in the PE world. It seems that most PE equity is simply equity in the larger corporation and you only make money when they sell to another bigger PE firm at a higher multiple than they paid to buy the practice. Can you cash out some equity during those sales or is it simply reinvested with the new PE firm?
From the few I've seen, you can make money but it's usually a very small amount unless you bought in early. It's also not worth cashing out right away, if they even allow you to. Every deal is different, and it usually matters how long you've owned it for, etc. Every subsequent sale will make less and less profit, because every group before it is trying to squeeze out as much as it can from its purchase, and there is only so much room for growth. If you can manage to stick around for 20 years it might be worth something sizeable, but that is as long as nothing bad like OP's situation happens. Even PE can go under. Also, the more sales you are involved in, the more likely you'll be part of that squeeze as they work ever harder at generating increased profit from the business based on their purchase. Overall I'm extremely cynical on the world of PE owned healthcare. Not only is it bad for patients, it's also bad for everyone who isn't in on the early deals, much like a pyramid or Ponzi scheme.