Orthopedic Clinic Searches for New “Practice Glue” While Eliminating Personal Guarantees

The leading Athens Orthopedic Clinic returned to CMAC for a third refinance with different objectives than its previous projects. The group wanted to consolidate debt, alleviate personal guarantees, and take cash out to distribute to the partners. Athens realized, however, that having personal guarantees was a significant component that had kept the group solid and strong throughout the years. CMAC was able to eliminate the personal guarantees while creating a solution that allowed the practice to maintain the glue that kept its partners together. A separate indemnity agreement would mean each of the partners would be on the hook for the debt in the same way that they would be with the bank. The agreement would be between the partners only and had unique release provisions that allowed them to remove an individual if they felt it would not be detrimental to the group as a whole. CMAC provided the idea for the initiative so Athens could move forward and execute among its partners. 

The final stretch to close this refinancing landed in the middle of the COVID-19 pandemic and a subsequent lending hiatus. CMAC led the group to closing, however, at a low rate fixed for 10 years. More than $10 million was provided in cash out to the partners and the financing reduced the bloated equity for partner buy-ins and buyouts. According to the group’s CEO, “the negotiations were quite complex and include the buyout of bank-imposed floor. Fortunately, we had some expertise on our side to guide us through.”

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