So, you have decided to sell your veterinary practice. For most practice owners, this is the most important business decision they have ever contemplated. Obviously, selling is not as simple as posting a “For sale” sign out front, and finding the right buyer is paramount to a successful transaction.
There are certain questions you should consider before starting the process of looking for the right buyer. They include the following:
- Do I want to sell my business to an associate, an individual outside the practice, or to a corporate group?
- How long am I willing to continue to practice once I sell? Most buyers require two to three years, but the term is often negotiable.
- What are your non-negotiable terms? Examples may include maintaining practice culture, similar or improved pay and benefits for employees, and maintaining autonomy over medical decisions.
- What basic structure am I looking for? Options might include selling 100% of the practice, entering into a joint venture and retaining a minority ownership, or retaining a portion of the sale price as equity with the corporate buyer.
The importance of selecting a practice broker
After thinking about what you want from the sale, the next, and most crucial, step is to retain a lawyer who has experience brokering veterinary practice transactions. While some practice brokers are able to negotiate deals, you will still need to retain the services of a good lawyer. One advantage of using a practice broker is their ability to bring individual buyers to the table.
If you are willing to entertain the option of selling to a corporate buyer, the most important task—once you have answered the above questions—is to narrow down the field. There are currently more than 80 corporate buyers in the veterinary marketplace. Because of the competition this generates, buyers have the luxury of being able to negotiate more terms than what has been offered in the past. The deals are no longer one-sided in favor of the buyer. This is assuming, of course, that your practice is not a “no low” practice.
When trying to whittle down the field of corporate buyers, take advantage of your professional network, and reach out to veterinary lawyers and CPAs, practice brokers, and veterinary colleagues who have previously sold. Ideally, you should reach out to six to eight different corporate groups. This allows you to compare multiple offers and focus on details that will ensure the best transaction possible. Be prepared to encounter non-negotiable items on the buyer’s side. The goal is to ensure these items are not deal-breakers for you. In turn, be prepared to tell the buyer what items are non-negotiable for you.
Reviewing letters of intent
After you have provided all the necessary information—I know, a daunting task—each prospective buyer will analyze the data and submit a letter of intent (LOI). I encourage you to wait until you receive all LOIs before beginning any negotiations. I also suggest that you have your lawyer or practice broker conduct all negotiations for you—especially if you are dealing with corporate buyers. This prevents you inadvertently agreeing to terms that are not in your best interest.
Be prepared for buyers to pressure you to sign LOIs soon after they have presented their offer. Make it clear that you will review their offer once you have received offers from all potential buyers. If the buyer asks questions of you once they have submitted their LOI, kindly refer them to your lawyer or practice broker.
As the terms are being negotiated, it is common for buyers to come back with a more favorable offer, however, they will have a limit regarding what they are willing to pay for your practice. Do not get greedy! If a buyer comes in with a slightly lower offer, but all the other terms are in your best interest, do not chase the money. Too often, a seller chooses the best monetary offer, and then realizes 12 months after the sale that the buyer has changed many aspects of the practice that were key to the overall culture.
Take the time to do it right
Selling your practice can be scary and exciting, and you may not have realized there were so many things to consider. To ensure you find the right buyer, ask a lot of questions, surround yourself with experts who can help negotiate the best deal for you, your team, and the practice, and don’t rush the process. This decision can dramatically affect how you live the remainder of your professional and personal life—ensure it is all you imagined it could be. Good luck and have fun!
If you are interested in learning about how Inspire Veterinary Partners is completely changing the landscape of veterinary corporate ownership, reach out to discuss our innovative, team-centered model.