Carta vs Forge When State Law Decides Who Can Even Own Your Shares

Many states restrict who can hold ownership in a professional medical or dental entity, generally requiring owners to be licensed practitioners, which is why PE-backed healthcare platforms typically split into a professional corporation (PC) holding the clinical license and a management services organization (MSO) that holds the business assets and contracts with the PC. Before pricing a physician-owner's buyout, confirm which entity her equity sits in, since the rules for who can buy it differ sharply between the two.

Forge's marketplace connects sellers with outside accredited and institutional buyers, and in most states those buyers simply cannot legally hold equity in the professional corporation itself, regardless of how interested they might be. Even setting the legal restriction aside, Forge's buyer network is built around recognizable venture-backed technology names and has no natural reach into healthcare services platforms.

If the equity in question sits in the MSO, which doesn't carry the same licensure restriction, Carta's tender offer mechanics can formalize a structured buyback there. That's a meaningfully different transaction than buying out PC equity, so confirm with healthcare counsel exactly which entity's interest is being sold before assuming Carta's standard process applies cleanly.

For PC-side equity, the more realistic path is usually a redemption defined inside the MSO or management agreement itself, sized against management fee cash flow the MSO generates from the practice, rather than an open-market sale to any willing buyer. This keeps the transaction inside a structure state law already permits, instead of trying to route around licensure restrictions with an outside marketplace.

Beyond the basic PC-versus-MSO licensure question, confirm whether your specific state allows any exceptions relevant to your situation, such as a licensed physician buyer being available among existing partners, and whether the MSO agreement itself places any additional restrictions on physician equity beyond what state law requires. Healthcare counsel experienced specifically in your state's corporate-practice-of-medicine rules, not general corporate counsel, is worth the extra cost here given how much the structure depends on getting this right.

Put these questions to healthcare counsel before you price anything:

• Which entity does the physician-owner's equity sit in, the professional corporation or the management services organization?
• Does your state allow any exceptions, such as a licensed physician among the existing partners buying the stake?
• Does the MSO agreement add restrictions on physician equity beyond what state law already requires?
• Does the counsel have specific experience with your state's corporate-practice-of-medicine rules, rather than general corporate work?

Budget four to six weeks for the healthcare counsel review alone, since confirming exactly how state law applies to your specific structure often takes longer than people expect. Once that review is complete and the redemption structure is confirmed as compliant, the MSO-side mechanics through Carta, if used, typically add another two to three weeks to close.

The most common mistake is structuring a redemption using generic corporate counsel unfamiliar with the specific state's corporate-practice-of-medicine rule, then discovering after the fact that the structure doesn't actually comply. Say a redemption is documented as a straightforward share buyback in the PC, without confirming that the buyer, even if it's the PC itself using MSO-advanced funds, satisfies every requirement of the specific state's rule; a structure like that can be challenged later, creating real risk for a transaction everyone thought was already closed.

Use healthcare counsel with specific experience in your state, not general corporate counsel, for this step. The incremental cost of healthcare-specific counsel is almost always small relative to the cost of unwinding or defending a non-compliant structure years later, and it's one of the few places in this transaction where paying for specialization is clearly worth it rather than optional.

Negotiate a clear representation from the MSO or platform confirming the redemption structure has been reviewed by healthcare counsel and complies with the specific state's corporate-practice-of-medicine rule, so the physician-owner has a documented basis for relying on the structure's compliance rather than just an informal assurance. This matters because the physician-owner, not just the platform, can bear risk if the structure is later challenged.

Also negotiate clarity on tax treatment, since redemptions inside an MSO agreement can be structured in different ways with meaningfully different tax consequences for the physician-owner, and this is worth a conversation with her own tax advisor, not just reliance on however the platform's finance team has modeled it.

Put the tax treatment conclusion in writing from her own advisor before closing, not as a follow-up item, since it can affect whether the structure she's agreeing to is actually the most favorable one available to her.