Thinking about selling your vet practice? 3 things to think about

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If you’re considering selling your practice, there are a wide range of things that you’ll have to do to get your practice sold. At VetVet we’re here to support you. We’ve put together this article about 3 things that you might want to consider related to the sale of your practice:

Associate veterinarians

The reality is the more productive doctors that you have and can keep on your team, the more valuable your practice is likely going to be. As recruiting associate veterinarians has become increasingly challenging, creating a practice that attracts and retains great talent has become more and more important. Some elements that you might want to consider to help attract and retain associate veterinarians and also position yourself well with buyers are listed below:

• Benefits: healthcare and reasonable vacation time.
• Production pay: this can help align incentives and give hard working doctors a financial reason to stay at your practice over the long term. Similarly paying doctors using the ProSal method can be helpful here.
• Mentorship and education: by going beyond traditional pay and benefits, practice owners can help create bonds between associates and practices by creating attractive mentorship and education programs. The good news about these, is that they will likely help generate an increased level of revenue for your practice. 
• Non-solicitation and non-competition provisions: Although these are not loved, many buyers will view your practice more favorably if you have these with associate veterinarians. 

Reporting

Serious buyers will require that your practice provide them with a range of reports to help them assess your practice. You’re likely creating these already on a regular basis, but if you’re not, having a historical record of 3 years or more for each of the below is helpful. Here are some that you should consider getting in order:

• Profit and Loss/ Income Statements (monthly)
• Tax returns
• Production reports, which shows production by DVM as well as the number of invoices
• Payroll reports: showing gross wages and deductions per employee
• Revenue by category, including service and inventory sales
• Balance sheets 

Many of these can be generated by your accountant, your accounting software (like Quickbooks) or through your practice management software. We’re here to help if you have questions as well.

Real estate

One thing that often surprises veterinary practice owners is that a large number of corporate buyers are interested in buying veterinary practice entities and not their real estate. 

Here at VetVet, we help facilitate the sale of practices (not real estate). We recognize however that for many practice owners, considering their real estate during the sale of their practice is important. Please find some thoughts below, with the caveat that we can help you sell your practice (the operating entity), but are not real estate brokers. 

If you rent:

• Personal guarantee: If you’re personally guaranteeing your lease, you’ll likely want to move away from this when you sell your practice. Getting a landlord to agree to moving away from your personal guarantee can be tricky and strategy around this should be considered carefully. 
• Length of your lease and renewal options: often, to help make your practice more favorable in the eyes of a potential buyer the longer you have control over your facility the better. 

If you own: 

• For someone who owns both their practice and their real estate and is selling their practice, when speaking with buyers, we believe that your goal should be to structure a lease between the practice entity and the property entity in a way that you’d be happy if you decided to hold the real estate yourself.
• Some questions that you might want to consider are:
  • Could the potential cash flow help support your lifestyle over time/ during your retirement?
  • What will the tenant be responsible for compared with the landlord?
  • How long is the lease term?
  • Will annual rent increases be sufficient?
  • Who is the new tenant from a financial and legal perspective? Will you be secure?
  • The multiple (or capitalization rate) a real estate buyer would pay for your real estate compared with your practice. 
  • If you share ownership of the property with other people, how will you manage responsibilities and your relationship long term?
  • Is the property value likely going to increase, decrease or be stable?

These are three of the many pieces that you should likely consider when thinking about a sale of your practice. At VetVet we’re here to help you navigate this process. Please get in touch with us if you’d like to discuss the sale of your practice or anything related to it.

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Contact information:

Email: Hello@VetVet.co

Phone: 510-969-2792

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