7seven. Key Steps. for Successfully Selling Your Veterinary Practice

Transcription

1 7seven Key Steps for Successfully Selling Your Veterinary Practice

2 7 Key Steps for Successfully Selling Your Veterinary Practice Today, owning a veterinary hospital can be a complicated undertaking. In addition to being a care provider who needs to stay at the forefront of veterinary medicine, you need to take on business responsibilities that put significant demands on your time, energy and peace of mind. These demands are the reason many veterinary owners perhaps you among them begin to consider selling their practices. But the prospect of selling can be daunting, and it elicits many questions, such as how do you undertake such a monumental task in the first place? And how do you transfer ownership, while ensuring that you can continue as the medical decision-maker and leader in the practice? And preserve your hospital s culture and record of success, even after the sale is complete? To help you answer these questions, we ve put together this brief whitepaper. It features 7 proven steps for successfully selling your practice, and can serve as a good starting point for veterinarians who are in the information-gathering and planning stages of their decisionmaking process. 1. RECOGNIZE WHEN YOU RE READY TO SELL. The signs are clear. You ve probably always loved being a veterinarian, but increasingly, you find yourself thinking about the difficulties of your job. Do any of the following sound familiar? You re putting in too many hours at the clinic. Once, it simply seemed like part of your commitment to succeed. But with all those tiresome admin tasks that consume your precious hours, now it seems like you re on a continuous and never-ending treadmill. You don t see patients nearly as much as you used to. Seeing patients is the truly rewarding part of being a veterinarian the part you love. But ownership responsibilities may be crowding out your time with patients you end up pushing paper instead of treating pets. You re starved for time with family and friends. Your patients aren t the only ones who see less of you. You re also missing out on good times with your loved ones, who are eager to once again enjoy your company. And as far as hobbies and travel go you simply can t find the hours to devote yourself to these pastimes as much as you d like. You want a clear-cut exit strategy for the future, but nothing has come into focus yet. You need to look ahead. But when it comes to charting your course over the next few years such as planning your eventual retirement, or figuring out a way to get cash equity out of your business you don t know where to begin. 1

3 In each case, there s an excellent chance you re ready to sell. It s a realization many veterinarians resist, at least for a time, but eventually, as job pressures mount, it s a course of action you ll see as highly desirable. In fact, as so many veterinarians have discovered, selling a practice can be the ideal way to reduce stress and enjoy practicing medicine again. 2. ESTABLISH CAREFULLY-DEFINED GOALS FOR WHAT YOU HOPE TO GET OUT OF THE SALE. Once you ve concluded that you re open to the idea of selling your practice, the next step is vital setting goals for what you hope to get out of the sale. That, after all, is what selling your practice is all about conducting a transaction that enables you to transform your professional, financial and personal lives for the better. Of course, defining your precise goals is up to you. Jot your ideas down on paper. Make a list. Prioritize. As a guidepost, here are a few of the many goals we ve seen veterinarians set for themselves and their practices as they enter into the sales process: Receive the price you deserve. Get paid for your practice in cash. Free yourself from the tedium and repetitiveness of administrative busy work. Keep your trusted staff. Enjoy regular hours, scheduled vacations, and time with family and friends. Maintain the culture and entrepreneurial drive of the practice you ve built. Retain your medical leadership role. 3. BE AWARE OF ONE CRUCIAL FACT ABOUT TIMING. As you set your goals, it s important to note you may want to move forward with urgency. That s because of one overriding market factor that will influence the sale of all veterinary practices for the foreseeable future. It concerns the fact that the Baby Boomer generation is starting to retire. That means veterinarians who were born between 1946 and 1964 are reaching retirement age and leaving the workforce. As they do so, they re putting their veterinary practices on the market, creating an unprecedented number of sellers. That means more competition for you when you sell potentially a lot more. But this demographic trend is still in its early stages, so there s still time for sellers to capitalize if they act now, before the full impact is felt over the next 12 to 15 years. If you re going to sell, you ll want to act decisively and not let market conditions overtake you. 2

4 4. RECOGNIZE THE MANY VARIABLES THAT GO INTO A VALUATION OF YOUR PRACTICE. Once you ve established that you want to proceed in a time-sensitive manner, the next question that may come to mind is, How much is my practice worth? It s an excellent question, and as you might expect, there are no easy answers. To begin, different practice types have different average price ranges with a wide range of variation. For example, the average practice/range ratio is different for a general veterinary practice than it would be for a specialty practice or an ER practice. That is, by the way, a subject we re well-versed on at PetVet Care Centers, since we specialize in appraising and buying all three types of practices a real point of differentiation from what you ll find with other buyers in the market. However, no matter what the type of practice you own, there are several factors you need to consider when seeking a valuation: Is your practice profitable? What are you netting over gross? How do you compare with your industry standard? Is your location optimal? Chances are, if you re in a rural or sparsely populated area, your practice will sell for less. What about your facility and equipment? Do you offer state-of-the-art equipment and capabilities in a modern facility, or are these areas where you re lagging behind? Where do you net out with your hours/revenue ratio? If it takes your practice twice as many hours to generate the same revenue as another practice, you ll be facing a more challenging sales environment. What s the nature of your service offering? In addition to your core competencies, does your hospital also offer services such as boarding, grooming, kenneling, pharmacy, acupuncture, chiropractic, and so on? How would you rate your staff? A highlytrained staff with employment longevity will look much better to a buyer than a transient staff with limited training. Are your financials in good shape? How has your practice performed in recent years, and where is it trending? Do you have competitors nearby? The fewer the better, of course, but every set of circumstances is different. Are you highly-regarded in the community and have you generated a reservoir of goodwill? That s an important factor in whether pet parents will continue to be clients after the sale and beyond. Those are just a few of the considerations that go into an accurate valuation. The important thing to remember is the quality of the valuation and your ability to get the price you deserve from your practice depends on the skills, experience, and professionalism of the appraiser. That s why you ll want to make sure you find the person or entity that is best qualified to do the job right. 3

5 5. DETERMINE WHETHER YOU D LIKE TO SELL DIRECTLY OR THROUGH A BROKER. You have choices. You can sell through a broker that specializes in arranging the sale of veterinary hospitals. Or you can sell directly to a buyer. In making your choice, you ll want to consider several advantages of selling directly to a buyer a set of benefits that can make the difference between you making a great deal or running into difficulties and complications that leave you less than satisfied. When you sell directly, there are: No broker s commissions. The sale of your hospital is your big payday, the culmination of all your years of hard work. You don t want to be paying a sizeable percentage of the proceeds to a broker who is simply acting as a go-between. No surprises. Suppose your broker lines you up with a buyer who s never bought a practice before? Or a repeat buyer with an inconsistent track record? In these circumstances, you can t be sure how your practice will fare after it s sold. But when you deal directly with the buyer or, to be more specific, the right buyer with the right history you know what you re getting at all times. No complicated hand-offs. You deal directly with the same team from start to finish from first contact through the sale and transition. Compare that to having to familiarize yourself with the broker s representatives, then the buyer s people, and anyone else who s been invited to give their opinion on the deal. Clearly, there are many good reasons to sell directly to a buyer. But you don t want to sell to just any buyer 6. FIND THE BUYER WHO OFFERS THE RIGHT PRICE, A GREAT FIT, AND IMPECCABLE CREDENTIALS. Now you re ready to find the ideal buyer for your practice. It will come as no surprise that a list of the ideal buyer s qualifications will closely mirror the goals you ve set for yourself in Step 2. You most likely want a buyer who offers you: Financial security. You ve put your heart and soul into building your practice. Now make sure you get a price that s commensurate with what it s actually worth, so you can achieve new levels of financial security for yourself and your family. Cash equity. In the best of all worlds, you want to be paid in cash, so you can invest the proceeds for your retirement or any other major life event. Freedom from the business end of the practice. Think of the sense of relief you d feel if you could find a resource that came into the practice to handle all of the HR, accounting, payroll, marketing, computer/ IT, legal, training, and recruiting/hiring functions that have consumed the better part of your work life in the past few years. This help is available now. 4

6 The chance to be a practicing veterinarian once again. Treating patients is why you got into veterinary medicine in the first place. Now return to your roots as a healer by treating the patients you were previously too busy to see. A well-balanced life. It s all about enjoying a richer, more rewarding life. To spend more time with family and friends, to take regularly-scheduled vacations, or to simply pursue the things in life you re passionate about locate the buyer who will truly liberate you from the drudgery of endless ownership tasks. The medical leadership responsibilities you re accustomed to. You ve been in charge of all medical decisions. That s something you don t want to give up after you make the sale. A competitive salary. You need to be properly compensated for all the talents you possess, and all the success you ve achieved. Retention of your staff. It makes sense to keep the staff you trust. Find a buyer who ll not only retain them, but offer many of them a chance for advancement that may not have been available in the past. PetVet Care Centers is the buyer who offers you all these benefits, and with whom you can make an excellent deal. In fact, once you approach us, you ll discover how we can be your perfect fit. Like dozens of veterinary owners before you, you ll find that everything seems to mesh when we meet you, that we put you at ease, establish a strong professional and personal bond with you, and give you the confidence that we ll take the practice to the next level. We carry through on that promise, too, as evidenced by all the practices we ve bought that are now thriving more robustly than ever. That makes the sellers happy, and when they re happy, it thrills us, too. 7. EXPLORE THE OPPORTUNITIES PRESENTED TO YOU BY PETVET CARE CENTERS. Take this opportunity to learn more about our rapidly-growing national network of general, specialty and emergency hospitals. See for yourself how we offer you a combination of benefits you won t find elsewhere, from the moment you contact us to the point in the future when the deal is done and you re reaping all the rewards that are due you. Only PetVet Care Centers offers you ALL of the following: The financial strength of an established network. We re not a single practice. We re an expanding network that has bought over 125 general, specialty and emergency hospitals in the U.S. in the past 5 years for more than $350 million. Our financial strength ensures we re here to stay, and enables us to give our member hospitals access to the best technology, people and treatments in the industry. No assembly line solutions. Yes, we re a sizeable network. But we re not the biggest network just the one that gives you the best in personalized solutions. Every one of our hospitals is different, and we don t try to fit each hospital into a pre-determined mold. Rather, when we buy your hospital, we build on your local reputation, and customize a deal to your individual needs and your hospital s unique strengths. No cookie-cutters here. 5

7 An experienced team at your service. Unlike all the new guys who ve recently gotten into the hospital acquisition business, we ve been through the process many times before. This experience is the crucial differentiator when it comes to putting together deals that are good for both buyer and seller. But rest assured, there s nothing slick about what we do. We work with you on a very human level, and make ourselves available to answer any questions and to get to know you as a future member of the PetVet Care Centers network. Deals done right. Historically, we close at the agreed-upon purchase price within 30 days of signing the letter of intent. Additionally, you re offered the flexibility of entering into a long-term lease agreement, or if you re the property owner, selling us the real estate. The vision to keep your dream alive. Count on us to preserve and further solidify the camaraderie, work ethic, and reason for being of the practice you ve built. An easy sales process and smooth transition. We ve always used our proven 5-step process that includes a preliminary review, making an offer, performing due diligence, closing, and ensuring a smooth transition. It s a process that works, and it s been imitated by others in the industry. But we re the ones who perfected it, and no one does it better. To take the next step, simply fill out the hospital profile on our web site. Or contact Gino Volpacchio, our Chairman and CEO, or Uri Failla, our Director of Business Development. Your inquiry will be held in the strictest confidence. TO LEARN MORE ABOUT HOW YOU CAN BENEFIT: Go to petvetcarecenters.com/yourfuture to fill out the hospital profile Call Gino Volpacchio at or him at gvolpacchio@petvetcarecenters.com Call Uri Failla at or him at ufailla@petvetcarecenters.com 6