Guide To Veterinary Practice Exit Strategy (2024)

Are you contemplating selling, merging, perhaps retiring from your veterinarian practice? Starting to create an exit plan long before you want to pull the trigger is an imperative. preparing well ahead of time results in a potentially higher valuation, but also prevents you from having to make a rushed decision and it means the transition can be a smooth one.

This article will discuss the key elements of an exit plan, typical obstacles, and future actions to assist veterinary practice owners in making thoughtful choices instead of hurriedly entering the selling process.

 “Practice owners are waiting until they are tapped out, exhausted, and ready to get out as quickly as possible. This creates a tremendous amount of stress on what they receive for the sale of their practices and the likelihood of selling to another veterinarian is low.” 

— Veterinary Practice News

Understanding Exit Strategies

An exit strategy is a comprehensive plan for selling, transferring, merging, or transferring the ownership of a veterinary practice. Whether it be a family member, another vet, a corporation, or merging with another practice, it’s important to set clear goals, choose the right exit option, and prepare the practice for sale. 

“It used to be if you were going to sell, you were doing it more for retirement purposes, and that’s definitely not the case anymore. Some people are trying to sell because just running and operating a practice is overwhelming.”

– Monica Dixon Perry, CVPM

Key Components of an Exit Strategy

Define Your Goals

1. Financial Goals: Determine the desired financial outcome from the sale. This includes understanding the practice’s worth and setting a realistic sale price. Understanding key drivers like profitability and market trends is essential for accurate valuation. Additional factors like starting a new business or funding your retirement nest egg will also need to be considered,

2. Legacy Goals: In addition to the financial considerations, there is the matter of continuity of care and preserving the practice’s culture. Consider selecting a buyer who shares your values and vision for the practice, someone willing to continue serving your community with the same level of care.

Choose the Right Exit Strategy

• Mergers and Acquisitions (M&A): Selling to a larger corporation can provide financial security and resources for growth, but may involve cultural changes. On the plus side, corporate buyers have extensive financial resources and typically higher sale prices.

• Selling to an Individual: This option can preserve the practice’s culture and client relationships. It often involves selling to a partner or an associate already familiar with the practice, and can often guarantee the continuation of the culture and client relationships, ensuring little change.

• Succession Planning: This involves the gradual transfer of ownership to a partner or family member to guarantee continuity and stability. This method necessitates thorough planning and communication with all involved parties.

Get Your Practice Ready for Sale

1. Financial Readiness: Arrange financial documents, perform a financial review, and verify the accuracy and currency of all records, including profit and loss statements and tax filings. At Transitions Elite we  emphasize the importance of transparent bookkeeping and organized financial statements.

2. Operational Preparation: Streamline operations to improve efficiency and appeal to potential buyers. This might include upgrading technology, optimizing staff schedules, and ensuring your facility is well-maintained. A well-run practice with the latest systems translates into strong financials which makes them attractive to buyers.

Communicate Your Plan

Transparency with your staff and clients is essential during the transition. Clear communication can alleviate stress and build trust.

• Staff Communication: Involve key staff members early in the process. Offer training or incentives to ensure they remain with the practice during and after the transition. Staff stability can increase the value of your practice by making sure operations and care remain the same.

• Client Communication: Develop a plan to inform clients about the sale. Reassure them about the continuity of care and any positive changes they can expect.

Seek Professional Guidance

Engaging experts can help navigate the complexities of selling a practice. Consider hiring:

• Brokers: Will not only find you the best buyer, but they can handle complex negotiations. Their expertise is invaluable when it comes to corporate buyers. A broker with M&A experience might be required, but worth it in the long run.

• Legal Advisors: Ensure the proper structuring of contracts, tax implications, smooth transfers, and especially helpful in corporate deals.
  
• Financial Planners: To help in handling the financial aspects of the sale and preparing for your future. They will also be important when it comes to investing the proceeds, handling taxes and retirement strategies.

Overcoming Common Problems

• Market Fluctuations: Keep up to date on market trends and modify your expectations as needed. Seeking advice from a broker can offer information on the current state of the market.

• Buyer Negotiations: Be prepared for negotiations by understanding your practice’s value and setting clear goals. Professional guidance can help navigate complex negotiations.

Conclusion

Having a carefully planned exit strategy is crucial for increasing the worth of your veterinary practice and guaranteeing a smooth transition. Practice owners can successfully navigate through the exit process by adhering to the steps provided in this guide and steering clear of typical mistakes.

“Many practice owners start thinking about selling too late—whether they hope to sell to an individual or a corporation. That’s because finding a practitioner-buyer other than an associate can take several years, and consolidators typically require sellers to keep working for years.”

– AAHA

Next Steps

1. Set Clear Goals: Define your financial and legacy goals to guide your exit strategy.
   
2. Communicate Effectively: Develop a communication plan for staff and clients to ensure a smooth transition.

By taking these steps, veterinary practice owners can position themselves for a successful exit and secure their financial future.

The last and most important step is to work with a trusted advisor  like Transitions Elite. Our goal is to help you find the best buyer and get the maximum sale price. Check reviews from the veterinarian who trusted us and ended up selling their practice at the best price to the ideal buyer .

I had previously looked at selling the practice on my own, and I had talked to five different companies about this and had gone through the process individually, and none of it turned out to my satisfaction. After I signed up with Tom, he marketed me to these interested companies. There was competition amongst those interested. It was so relieving at the end of it to know that I got the very best deal possible!

David Graeff, Cedar Rapids, Iowa

I knew that I would get the best value for my practice if I had a professional helping me. And it definitely turned out to be true with having Tom in my corner. 

I have zero doubt that I would not have gotten the value for my practice if I didn’t have him on my side as well as the ease of it. It was such an easy transition and he made the entire process very simple. 

Sharon Gorman – Las Vegas, Nevada

Transitions Elite holds your hand and guides you through the whole process. Even though it’s a stressful time and situation, they make selling so easy.

Dr. Lonnie & Naomi Davis – Ohio

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