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that they received from SMF is also demonstrated by petitioners'
rejection of the proposed transaction with Foundation (wherein
they would have sold their practices to, and entered into an
agreement to provide future services for, Foundation).
Petitioners make much of the fact that Foundation, as a for-profit
entity, was willing to pay substantial sums for petitioners'
intangible assets because it was not constrained by the Federal
proscriptions on such payments applicable to nonprofit, tax-exempt
entities. But when petitioners were offered the opportunity to
affiliate with Foundation (and receive an outright cash payment
for their intangibles), they collectively rejected the prospect in
favor of an acquirer that offered them working conditions they
preferred, greater economic security through multiple sources of
payment, a "free to compete" provision whereby any of them could
essentially "unwind" the transaction and retrieve his or her
patients if he or she desired to terminate the relationship with
the acquirer, a role in management, and other intangible benefits
that were negotiated between the SWMG physicians and SMF. Viewed
in this light, it is apparent that the intangible benefits that
petitioners received in the transaction with SMF were of
substantial value to them. Petitioners spurned a cash payment for
their medical practice intangibles in order to obtain these
benefits in a different transaction. On this record, petitioners
have not shown that the value of what they received in the
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Last modified: March 27, 2008