Our Goal: Streamline Your Exit
When you’re ready to exit the profession and sell your practice, the five years prior to an ownership transition are critical in maximizing your practice’s value and planning for a seamless transition. Between now and then, there are steps that will help demonstrate your practice’s value to a potential buyer. Summit Veterinary Advisors is uniquely equipped to walk you through this process and help you understand the steps and challenges of this last stage of the Practice Lifecycle©. Our vast expertise in this area has streamlined this process for many practice owners and made their transition much more enjoyable.
To learn more about how you will benefit from our individual service offerings that are designed to sell your practice, click on one of the service links below.
Whether you are the owner or the associate of a veterinary practice, buy-ins can be a winning solution for both parties.
Many owners choose to exit their veterinary practices in stages, which means they will sell a small piece of ownership to a valued associate or group of associates several years before they actually plan to leave. Such a strategy allows younger doctors to enter ownership sooner and to develop practice management skills alongside the current owner.
In most cases, the process has two steps:
Step 1: sale of a partial interest in the practice is brokered between the owner and the associate or group of associates;
Step 2: occurs a set number of years later. The associate or group of associates purchases the remainder of the practice when the original owner is ready to exit.
This approach creates a smooth and successful transition for the owners, staff and clients. There are some important considerations, however:
- What portion of the owner’s interest should initially be sold?
- How do you determine a price that is fair to both buyer and seller?
- How do you ensure that the asking price accurately represents what is actually being sold, i.e., a non-controlling ownership interest?
- Should an associate get a price break for past services?
- Can an associate get outside financing to buy a piece of a practice?
- What are the income tax consequences for both the buyer and the seller?
Contact us today to discuss these concerns and learn more about how to properly structure an associate buy-in. We work with both buyers and sellers to structure buy-ins designed to accommodate their specific needs.
Whether you’re just starting your veterinary practice or you believe that selling/retiring is years away, it is important to consider your options now. Evaluating your choices, and keeping as many options open for as long as possible, will be helpful when you’re ready to exit your practice.
Throughout your ownership years, take time to view your practice from an outsider’s perspective:
- Is your veterinary practice profitable?
- Is it attractive?
- Are you offering the services that your clients want or need?
- Are your facility and equipment up-to-date?
- Could you make changes right now that would increase practice profitability and business appeal to buyers? Do you know what those changes are?
The five years prior to an ownership transition are critical to maximize practice value and plan for a seamless transition.
Profits during this period provide cash flow to the practice and its current owners as well as increased practice value over time.
Good recordkeeping will help you demonstrate the value of your practice to a potential buyer, both in terms of financial results and in the quality of medicine evidenced in your medical records.
As you get closer to leaving ownership, explore the tax and legal implications of selling your practice.
Smooth transitions depend on buyers and sellers who do their homework and approach a sale realistically. The goal is to maximize the seller’s after-tax proceeds while setting the buyer up for success.
Want more information? Call us today.
Multi-owner practices have the potential to lose one or more owners to retirement, relocation, change of career direction or other life changes. In a few cases, an owner must force another out of the veterinary practice due to legal, health or quality concerns. Regardless of the circumstance, there is no substitute for a well-drafted ownership agreement that is signed by all parties and spells out what should happen in each situation.
Ideally, that agreement will set forth the steps each party must take, the procedure for determining the value of the departing owner’s interest, details regarding who will buy that interest, and the terms for financing the buy-out. The buyer may be the veterinary practice itself, one or more of the existing partners, or an associate now working in the practice.
We are not attorneys; however, our extensive experience with ownership transitions is a tremendous asset when combined with the efforts of legal counsel. We can also work with a CPA, whether contracted by the practice or an individual owner, to design a more tax-favored strategy for ownership exit or partner buy-out. Partner collaboration is extremely beneficial during this process, as adversarial relationships can be a detriment to all involved.
Unfortunately, sometimes there is no owners’ agreement, or the existing agreement doesn’t reflect the realities of today. For example, the valuation clause may set forth a formula which significantly over- or undervalues an owner’s interest in the practice. Or the terms of a buy-out may be so favorable to the departing owner that the practice cannot afford the payments. Conversely, there may be no discussion of a buy-out price or terms, and each partner has a different practice value in mind. Perhaps one partner is not willing to buy out the other in a two-owner practice and an outside buyer must be found.
If you face situations similar to any of these in your veterinary practice, we can help you explore options to find a solution that will serve the owners and ensure the continued success of the practice.
Call or Click here to get started now.
Are you contemplating a partial or complete purchase of an existing veterinary practice?
In many cases, the asking price of the business has been set by the current owner or by a broker who stands to profit from the sale of the business. Therefore, it is critical that you have the value of the business determined by an impartial third party. This is where Summit Veterinary Advisors can help.
Our accredited valuation analysts abide by the standards of the National Association of Certified Valuators & Analysts (NACVA), the Institute of Business Appraisers (IBA) and the American Institute of Certified Public Accountants (AICPA). These standards require us to perform an in-depth analysis of the business in order to determine the most reasonable and unbiased opinion of value possible.
Our valuation process includes a detailed analysis of the historical financial performance of the business as well as a wide variety of factors that can impact the long-term financial success of a veterinary practice.
Factors considered include:
- Location and quality of the facility;
- Local demographics;
- Competition in the practice area;
- Quality of the staff and the management systems in place;
- Long-term stability of the practice;
- Quality of the existing lease;
- Service/product mix, and many more.
Our reports not only give you our fair and unbiased opinion of value, they give you a much better understanding of the business you want to purchase.
Questions? Call or Click here to get started now.
I worked with Leslie and Summit Veterinary Advisors from 2009 until I sold my practice in 2014. They have helped organize almost every aspect of my veterinary ophthalmology practice, from simple bookkeeping to hiring of staff and associates and purchase of an additional practice. Summit’s consultants are experts at specialty practice valuations and have many wonderful resources at their fingertips to make the sale or purchase of a practice less arduous. They really understand the difference between a specialty and a general practice.
Deborah Friedman
DVM, DACVO
