You’re almost to the finish line. You’ve worked hard to build your practice, your culture, and your reputation. You’ve done the work many people don’t do and now you’re ready to sell your practice and move on to the next chapter of your life, whether that is retirement, a career change, or working as a veterinarian without the stress and burden of ownership. I get it. I’m in the same boat. After working as a veterinarian for more than 26 years, most of them as a small animal practice owner, I’m ready to let the next generation take charge.
So, here’s the big question: Who should you sell to? The answer: It depends. What are your goals for the sale, and for the practice once you’re gone? For some, it’s ensuring the legacy they’ve started continues. For others, it’s about economics. It’s OK to want to make as much money on the sale as possible—most people don’t own a business hoping to only break even when they sell.
Selling to a corporate consolidator
One option is to sell to the highest bidder. After all, you’ve worked hard, so why wouldn’t you sell high? Keep in mind that the highest offers usually come from corporate consolidators. With multipliers in the 12 to 15+ range, selling to a consolidator can be tempting. However, many consolidators will require you to stay on at the practice for a period of time, often three to five years, and work for them. A few things to consider about this situation include:
- Are you willing to go from owner to associate?
- Are you willing to give up control of the day-to-day decisions?
- Will you be able to let someone else steer the culture of your team?
Some consolidators establish benchmarks that must be met in order for you to be paid the next “installment” of the purchase price. Are you willing to gamble that their metrics will be met? One of the benchmarks may be net production, but you may no longer have control over how the money is spent.
I’m not saying that all consolidators are bad, because they aren’t. There are a few, such as Inspire Veterinary Partners, who put the team’s culture and the practice’s reputation first. However, if you are considering selling to a corporation, do your homework, and hire your own lawyers and consultants to help you scrutinize the fine print and ask the right questions.
Selling to an associate veterinarian
An associate who has been with you for several years and who has helped build the practice, culture, and community reputation is often a great choice. This used to be “the norm,” but it has become impossible for young associates to compete with corporate multipliers. With student loan debt, a young family, and a home mortgage, taking on an additional six- to eight-figure debt load can be daunting for an associate doctor to consider.
While a private sale may not garner as high of a selling price, this option offers substantial rewards. Many times, clients are excited to see the young vet take over. This type of transition provides more stability for your team, less stress, and possibly little to no culture shift. Plus, your legacy can live on. And, should you choose, you can stay on to mentor and guide your protégé through the stresses of being a new practice owner. If, like me, you didn’t have a mentor when you bought or started your practice, think how nice it would’ve been to have a guide for all the day-to-day details.
Selling to a private owner
What if you don’t want to sell to a consolidator but you don’t have an associate who wants to buy your practice? There are veterinarians who are looking to buy an established practice instead of starting from the ground up. There are also brokers out there who match buyers with sellers. Questions to consider before going this route might include:
- Will the new owner continue your legacy? (Maybe, maybe not.)
- Will the new owner keep your current team? (Likely, but nothing is guaranteed.)
- Will the new owner want you to stay on during the transition period? (Maybe, maybe not.)
A new selling model
A relatively newer option is a hybrid of sorts. Some consolidators now offer partnerships where they buy a portion of the practice and you maintain ownership of a portion, or sell your portion to an associate. Some, such as Inspire Veterinary Partners, go one step further and provide stock ownership to hospital employees. This offers many benefits:
- A portion of the sale may—or may not—garner a higher multiplier
- Employees may have access to better benefits programs than most private owners can offer
- Access to corporate buying deals from suppliers
- Human resources assistance for employee issues and recruitment, including veterinary associates.
Regardless of who you choose to sell to, do your homework, and hire a team to work on your behalf. Your team should include:
- A valuator
- Possibly a property appraiser if you own the building and land
- A lawyer
- A consultant
- Your accountant
It’s never too early to start planning for a sale and finding the right people to work on your behalf!