Selling Your Veterinary Practice Does NOT Mean You Have to Stop Practicing
5 Reasons to Hire a Veterinary Practice Specialist During the Veterinary Business Sale Process
1. Database of Buyers
Those within the marketplace will have access to a comprehensive database of practice buyers. They will have completed all due diligence on those capable of completing the transaction and have developed comprehensive business relationships within the industry. This can help streamline the business transaction and ensure sellers receive a lucrative price for their business.
2. Full Access to Marketing Channels
Specialists within the veterinary practice marketplace can help enhance sale strategies through effective marketing channels. They know the areas potential buyers look for buying opportunities and can craft refined marketing strategies designed to appeal to specific types of buyers. Their access to these highly effective marketing channels also means industry specialists can help maximize the value of the business and reduce sales roadblocks.
3. Help Selecting a Transition Plan
Working with a trusted veterinary practice sales expert also means that business owners can select their ideal transition plan when selling their company. For example, they may wish to only sell part of their practice and remain the owner of the rest of the company. Specialists within the industry can help coordinate this process and ensure that the full value of the entire organization is protected during the sale. Veterinary practice sales experts can also help coordinate sales to corporate groups by individual owners, advising the owner on their rights within the process and helping to complete the complex documentation involved within the sale.
4. Direct Access to Sales Knowledge
One of the leading reasons so many veterinary business owners are now choosing a specialist for the sale of their practice is that specialists can answer questions based on direct knowledge within the industry. They can help the practice owner decide what to do with their equipment after the sale. for example. They can also answer questions related to post-sale staff needs, as well as how to communicate with staff directly during the sale process. This eases the sales transition and ensures business owners also have an expert available to consult with throughout.
5. Creating a Valuation for the Company
By determining the value of the company, veterinary practice experts can ensure their client achieves full value for money. They can use their industry knowledge, as well as their understanding of the local marketplace, to ensure the company is valued at a level that will attract high-quality buyers and ensure a fast, and profitable sale.
By working directly with a trusted veterinary practice sales expert, veterinary business owners can maximize the return for their business investment. To learn more, speak with the team at Omni Veterinary Practice Group directly at 877.866.6053 or email info@omnipg-vet.com.
How Omni Veterinary Practice Group Helps Practice Owners Prepare Their Veterinary Practice for Sale
1. Financial Reporting
A critical element in the sale of any business property is financial reporting. Buyers will complete due diligence on the company they are purchasing and it is important all financials are in order and ready for review. Omni Veterinary Practice Group helps business owners complete the financial reporting process. They gather the required documents and ensure the documents are completed accurately and according to the strict standards within the industry.
2. Consolidating Business Resources
During the search for a local veterinary practice for sale, buyers will be reviewing the market for practices that are lean and do not have excess resources to manage and pay for over the long-term. After assessing the finances of the practice, Omni Veterinary Practice Group works to consolidate the business’s resources, removing unnecessary expenses related to vendors, staff, and equipment and helping business owners understand the resources that are important to their company and potential future buyers.
3. Remodeling Work
In consulting with veterinary practice owners, Omni Veterinary Practice Group will advise them on potential remodeling requirements. They will guide owners on the paintwork and property upgrades required to ensure the practice is sale-ready. This process is completed alongside trusted building inspection teams that analyze all areas of the property to determine whether any upgrades are required before placing the practice on the marketplace. Any issues in the practice will be highlighted by the buyers’ representatives during their due diligence on the practice, and so sellers that finish remodeling work proactively and ensure all problems are resolved can showcase their commitment to the sale.
4. Analysis of Practice Value
When getting their veterinary practice ready for sale on the marketplace, owners must consider the optimum value for the company and how they can harness this valuation to attract the right types of buyer for the organization. Omni Veterinary Practice Group has significant experience in this area of the marketplace. They can help business owners detail the most important elements that determine a practice’s value. For example, they know that margins are more important to buyers than gross production levels. And so they can use this knowledge to value the practice at the highest rate possible according to market demand.
Omni Veterinary Practice Group is a clear leader within the local industry. To learn more on the company and their services, contact their offices directly today at 877.866.6053 or email info@omnipg-vet.com.
ANALYZING A LEASE IN A VETERINARY PRACTICE ACQUISITION
When you get a copy of the lease, you or your adviser should contact the landlord or property manager. Be sure the seller has informed the landlord that they are selling the veterinary practice first. If there is a short time left on the lease, the landlord may be willing to do an extension on the lease. You can put conditions on the extension that can include getting a tenant improvement credit to cover new paint, carpet, etc., free rent for a few months, lower rent, etc., I’ve even had a situation where the landlord loaned money to the tenant to completely remodel the practice.
Remember that everything is negotiable. Don’t automatically assume the lease is set and you cannot change anything. At the same time, know how to negotiate. If you go for a home run right off the bat, you may turn the landlord off and they won’t be willing to negotiate. If you’re working with a broker, it’s best to let them handle the negotiating. They’re the experts and can save you thousands if done right.
Be An Educated Veterinary Practice Buyer
The very first recommendation I have is that you should be at least 2 years out of school. I have seen doctors buy a practice right out of school, but the majority of them struggled for two to three years before they finally figured things out. So, here are the steps you should take to become educated in buying a practice:
1. Contact a bank that finances veterinary practice acquisitions and make sure you can qualify for a good loan. The days of just having a DVM behind your name and being qualified are gone. Banks now require decent credit scores, cash in the bank, and in some cases a current associateship.
2. The next step is to understand a little bit about veterinary practice valuations. You don’t want to go into a sale not knowing if the practice is worth the price listed or not. A “rule of thumb” is that a practice is typically worth between 85% and 95% of its’ last 12 months production. Remember, that’s a rule of thumb. I’ve seen practices go for as high as 110% of production and as low as 50% of production. A formal valuation is the best way to get the true value of a practice as not all practices are the same.
3. Think about where you want to practice. You’re probably going to be there a while, so you might as well like the area. Also, research demographics. There are excellent demographic sites that sell great demographic information for about $500. It will tell you where the best locations to practice are.
4. Put together a good team. Get referrals for a good veterinary attorney, a good broker or consultant and a good accountant. They’ll help you analyze the practice, do the legal work and help you find a practice.
5. Study up on practice management and veterinary financial ratios. You should know that lab fees should not be any higher than 10% of the practice production. Or, that staff expense should be between 20% to 25% of production. Be an informed buyer.
6. Be prepared for your due diligence. You need to know what to look for when you do get to the point of buying a practice. Scrub the financials, practice management reports and audit charts. Work with your consultant to thoroughly go through the practice. Take your time and do not rush into it.
7. Finally, spend some time with a broker before you go look at the practice. Understand what the practice you are looking at is all about. Does the broker think it’s honestly a good practice? Why? Once you’re comfortable with the numbers, then go take a look at the practice.
By being an informed veterinary practice buyer, you will avoid a lot of headaches and potential problems down the road. There are practices that are excellent and practices that you may want to pass on. Being educated and knowing the difference is critical in your veterinary practice acquisition success.
-Rod Johnston, MBA. CMA