Transaction tip of the day: defining reserved powers

An operating agreement is a detailed and essential document that defines how a joint venture ambulatory surgery center will run and how its partners will interact.

While ownership stake plays a large role in determining power, each class of investors has the right to name and use reserved powers, as defined in the operating agreement, according to a recent Becker's ASC Review article.

A hospital may typically reserve the right to dictate what procedures can and cannot be performed in the ASC.

"The biggest thing physicians want is microeconomic control," said Joe Zasa, managing partner of ASD Management in the report. "How does the center operate on a day-to-day basis: hiring, firing, dividends, etc."

More Articles on Transactions and Valuation Issues:
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