Steps to Buying a Practice – or – How Not to Lose your Shirt While Buying a Practice
Buying a veterinary practice can be and is a daunting task. It’s much more involved than purchasing a car or even a house. You have to wear many hats including shopper, negotiator, accountant, finance, lawyer, practice management expert, equipment specialist and even human resources manager. One wrong step and you could set yourself back financially, legally and even personally if something goes wrong. You have to know what to look for every step along the process. But, what is the process? Here is an abbreviated version of what those steps are:
- Find a practice. Finding a practice isn’t hard. Finding a good one is. Get in touch with all of the brokers and get on their e-mail lists.
- Begin speaking with banks that specialize in veterinary practices.
- Review the documents the broker sent you. You should get a prospectus that gives a decent summary of the practice along with demographics. You should get at least 3 years tax returns, profit and loss statements, production by procedure report, production by provider report and an accounts receivable aging balance. And, that’s just the start.
- Review financials with your accountant. Or, if you minored in accounting or understand numbers, you can review them yourself.
- Make your offer and negotiate. Don’t low-ball the offer unless you know they may accept any offer. A good practice will go quick, so wasting anytime will result in missing out on the practice. Add your contingencies in the letter of intent. Review with an attorney.
- Do your due diligence – review charts, x-rays, staff pay and benefits, equipment, UCC filings, the reputation of the veterinarian and practice, state licensing review on the seller, etc., Get in as deep as you can.
- Review the lease. Make sure it’s not too high, no tear down clauses, lease expiring, etc.
- Begin legal review of agreements. Get your attorney involved. Choose a good veterinary attorney.
- Complete the Omni 70 point checklist for closing the sale of a practice.
- Hold staff meeting to be introduced as the buyer.
- Work through escrow in closing the sale.
- Begin your new life as a practice owner.
As you can see from this abbreviated list, there’s a lot to do. You can go it alone and swim with the sharks, or, you can have our Buyer’s Transition Consultant help you through the process.
