Oral Surgery Office Development Deal Structure Question

[Taylor Nielsen]

Hello All,

This is my first post on BP. I listen to the podcast and love it. I am getting into my first deal this coming summer. My father is a partner in a large oral surgery practice. They are looking at opening a 4th location (6,000-8,000sqft). My father and 2 of his partners are going to develop the building (this has been the established pattern in previous offices that the partners are the investors and they hire a 3rd party to develop the site and building). My father and the 2 other partners will be forming an entity to negotiate a lease with their oral surgery practice entity. My father wants to split his %33.33 share of the deal with me as he does not want to put too much of his liquid cash into the deal and limit his exposure. I am thinking that the best way to do this is to form and LLC (or other entity) with my father and then use that entity to sign for the entity with the other 2 partners in the deal. This would give both my father and I a %16.66 share of the deal and limit his exposure. All cash investments and leverage would reflect % share of the deal.

My question for you wonderful BP contributors is this. Is this a good way to structure the deal? what advise would you give me on on doing this deal? Also, there was a recent podcast on BP talking about new tax code implications on future deals and how structures should be set up to make all partners "non-limited" but I did not fully grasp the reasons why. Can any of you explain why in layman terms? Any and all advise is very welcome. Thank you in advance. I can provide more information as requested.