Influx of Sellers Hitting the Market
I have heard from other practice transition consultants, bankers and attorneys who are telling me they are busier than ever. We, Omni Veterinary Practice group, are experiencing the same thing with more listings and more practices under contract than ever before. So, why are so many veterinarians deciding now is the time to sell? I believe it’s for a number of reasons:
- Interest Rates are rising. Buyers have had the luxury of living through ultra-low interest rates over the past five years. Historically, interest rates on practice acquisitions have been around 7% to 8%. The last five years, we’ve seen them dip down to an average of 3.8% and one bank offering loans at 1.89%! Crazy rates! Buyers are now seeing the rates creep back up. Current rates are around 5% to 5.5%. This is scaring some buyers into acting on their desire to own a practice. They feel if they wait, interest rates will be back to the 7 to 8% rate soon.
- Baby Boomers are reaching their peak. Baby boomers doctors make up the largest portion of the veterinarian population. Approximately 50% of veterinarians are now over the age of 55. The largest portion of the baby boomer population is now hitting their mid-60’s. These doctors are now selling and retiring. Along with this, as we age life events, such as health issues, or even death happens. We are seeing sellers with health challenges where they cannot work at the same pace as they were before, or they cannot work at all.
- Veterinarians tired of being Practice Owners. Several of our current listings are from doctors in their 40’s or 50’s who are just tired of being owners. Managing staff and managing expenses such as rent, employee benefits, etc., have caused owners to rethink their dream of owning a practice.
- Equity Harvesting. Veterinarians at the peak of their production in their practice are deciding to sell their practices and get the equity out before production goes down. Many are selling to either small groups or investor veterinarians who allow the seller to not only harvest their equity but also to work back in the practice. A perfect storm in most situations.
Whether you fit into any of these categories or even if you are in the middle of your career, you owe it to yourself and your family to have a transition plan in place. Life events happen. We meet with veterinarians of all ages to discuss their career plan and look at different options of how to sail into retirement, or even sell and work back. We put customized plans in place and offer solutions in the event the doctor needs to sell quickly.