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10 Things to consider when selling a veterinary practice
Curious about selling your practice? Get a better idea of the options available to you and the decisions to be made.
This article is sponsored by NVA.
The end goal for a successful veterinary practice owner is to one day sell their hospital for a lucrative price and start their next chapter. For some, that next phase is complete retirement. For others, it might mean stepping away from a managerial role to focus solely on medicine, carving out more free personal time or sharing the responsibilities with a partner.
When it comes to finding a veterinary business partner dedicated to supporting community hospitals, National Veterinary Associates (NVA) is an industry leader. Founded in 1996, NVA is home to an expansive community of freestanding veterinary hospitals that includes more than 14,000 veterinary professionals providing a full range of medical and surgical services.
Unlike a transaction between 2 individuals, NVA is backed by 25 years of domestic and international partnership experience. This know-how provides NVA with the unique ability to provide hospital owners with opportunities that best suit their needs. From cash offers to joint ventures and even future associate buy-ins, NVA helps practices develop a plan as unique as they are.
“We believe that veterinary medicine is best practiced when local veterinarians craft their own approach, so when a hospital joins NVA, we keep the culture, people, and name intact,” says NVA’s founder, Stan Creighton, DVM, DACVIM. “We created a community [that] people are proud to be part of—and we credit that for the growth we’re still experiencing today.”
Hospitals that partner with NVA gain the knowledge of NVA’s skilled support team and a network of successful practices. NVA resources include an information technology desk, client service center for appointment reminders, and social media and online review experts. They also offer support for tasks like accounting, legal, recruiting, marketing, and operations.
“Turns out, NVA were people of their word. They didn’t touch our culture at all. They improved our technology, helped us run our business, and let us practice medicine the way we always have,” said Dr. Jeffrey Krull, Managing Veterinarian at Flying Cloud Animal Hospital in Eden Prairie, Minnesota.
“That’s what every doctor wants—to make those decisions ourselves. We don’t need an algorithm or program to tell us what to do.” Dr. Jeffrey Krull has been a member of the Flying Cloud Animal Hospital team since 2002 and after the practice became an NVA partner in 2008, he promoted into the role of Medical Director. In 2019, NVA helped Dr. Krull realize his lifelong goal of becoming a practice owner right at the hospital he already knew and loved.
“I’ve wanted to be a practice owner since I started vet school. When NVA first proposed it, I was excited from the beginning. I knew they would be a good group to partner with.”
If you are searching for a path to retirement, ready to take a step back and focus on medicine or interested in helping your associates realize their dreams of practice ownership, a partnership might be the right choice for you. If you are ready for the next chapter in your life, be sure to take the time to explore all the options available to you and ask yourself these 10 questions as you consider selling your practice.
What do you want to accomplish with the sale?
Owning a veterinary practice can take its toll. Days off without thinking about staff scheduling or long-term goals are few and far between. Even if your practice is thriving, the commitment that comes with ownership might eventually become too cumbersome, so the idea of selling becomes more appealing. Obviously, the sale price is going to be a paramount consideration; however, you should also explore all of the options available to you. Do you want a single buyer? Is there an associate you would consider selling to or partnering with? Would your practice do best with the support of a larger parent company?
Will you continue practicing?
It is important for practice owners to determine whether they want to retire upon selling or if they would prefer to still work. Selling a practice does not mean you need to cut all ties. In fact, it is common for previous practice owners to stay on board after a sale. Do you want to work only a few days each week? Do you want to hand off all business operations and focus solely on practicing veterinary medicine? Do you plan to phase yourself out of the business after a few years? These are all key points that need clarified in the early stages of negotiation to ensure a smooth transaction. Remember, you have control over the terms of your sale and these decisions are yours to make. Don’t settle for a buyer who might try to convince you otherwise.
Have you considered the emotional impact of selling?
You have undoubtedly put a lot of time and passion into building your practice into the successful, trusted part of the community that it is today. Are you ready to let go of that role? And if you will continue to work at the hospital, are you prepared to work for someone else? Selling a practice is multifaceted. As excited as you may be, take some time to fully understand the emotional implications of the decision so you are not caught off guard down the road.
How will your staff be impacted?
Although your hospital staff may not be privy to every detail of the sale, you will need to have an honest discussion about the sale and provide a general timeline for how things will progress in the coming weeks or months.
Are all of your financial and legal documents in order?
Be as prepared as possible to avoid setbacks or delays during the process of selling your hospital. Ensure key documents—partnership agreements, licenses, ownership records, lease agreements, vendor contracts, etc—are accurate and readily available.
Would you like to enhance your practice and grow your team?
Selling your veterinary practice through a partnership agreement could be an opportunity to upgrade equipment and services while simultaneously expanding the business. Forming a partnership with a larger group of practices provides community hospitals with access to a network of medical professionals for sharing ideas and key learnings.
Who is the right partner for you?
Sure, someone with the financial means to purchase your practice is a necessity, but there is much more to consider. You have built your practice to be an integral part of your community; it is important to make sure the reputation continues. Take the time to explore all the options available to you and don’t feel pressured to jump at the first offer. Look for a buyer that is open to negotiations and provides feedback. In addition to the terms, consider how the buyer will handle the transition process and employee well-being.
What contingencies are you comfortable with?
Often, purchase-and-sale contracts include preclosing contingencies that must be agreed upon. Your associates may be asked to sign commitments to remain with the practice for a minimum of time after the closing. Another might be that the buyer can negotiate a lease for the use of the property from the seller or the seller’s landlord. Contingencies vary from deal to deal but familiarizing yourself with some of the more common requests can alleviate future shock.
Do you know the value of your practice?
You have poured a lot of blood, sweat, and tears into building your practice, but those sacrifices do not have a price tag. There are, however, finite factors that will help determine the listing price. These include the practice itself, equipment, and current and potential revenue. Potential buyers will also consider gross revenue, profit and loss statements, net operating income, EBITDA (earnings before interest, taxes, depreciation, and amortization), profit margins, and various other financial documents and benchmarks. Consider what your practice has to offer and what changes might lead to an increase in its value.
Are you ready to start the planning process?
Even if the thought of retiring has not crossed your mind, you may find it intriguing to explore the idea of a partnership a bit further. Working with companies like NVA provides hospitals with a wealth of opportunities. Your veterinary practice is likely one of the largest investments—if not the largest—you have ever made. Treat it as such by regularly monitoring its value and exploring new avenues of growth.
Selling should never be a rash decision and there is no one who knows your hospital, clients, or staff better than you. Weigh the pros and cons of each possible transaction that presents itself to determine if it might be the right choice for you.
NVA is a leading veterinary community of independently managed veterinary hospitals providing specialty, emergency, and general medical care, all united in the love of animals and the people who love them. NVA champions each hospital's unique culture and opportunities by enabling innovation, collaboration, and a commitment to delivering exceptional care to pets and their families. For more information, visit nva.com