• Vetiranary Medicine
  • ACVCACVC
  • DVM 360
  • Fetch DVM 360Fetch DVM 360
DVM 360
dvm360 | Veterinary News, Veterinarian Insights, Medicine, Pet Care
dvm360 | Veterinary News, Veterinarian Insights, Medicine, Pet Care
By Role
AssociatesOwnersPractice ManagerStudentsTechnicians
Subscriptions
dvm360 Newsletterdvm360 Magazine
News
All News
Association
Breaking News
Conference Coverage
Education
Equine
FDA
Law & Ethics
Market Trends
Medical
Politics
Products
Recalls
Regulatory
Digital Media
dvm360 LIVE!™
Expert Interviews
The Vet Blast Podcast
Medical World News
Pet Connections
The Dilemma Live
Vet Perspectives™
Weekly Newscast
dvm360 Insights™
Publications
All Publications
dvm360
Firstline
Supplements
Top Recommended Veterinary Products
Vetted
Clinical
All Clinical
Anesthesia
Animal Welfare
Behavior
Cardiology
CBD in Pets
Dentistry
Dermatology
Diabetes
Emergency & Critical Care
Endocrinology
Equine Medicine
Exotic Animal Medicine
Feline Medicine
Gastroenterology
Imaging
Infectious Diseases
Integrative Medicine
Nutrition
Oncology
Ophthalmology
Orthopedics
Pain Management
Parasitology
Pharmacy
Surgery
Toxicology
Urology & Nephrology
Virtual Care
Business
All Business
Business & Personal Finance
Hospital Design
Personnel Management
Practice Finances
Practice Operations
Wellbeing & Lifestyle
Continuing Education
Conferences
Conference Listing
Conference Proceedings
Resources
CBD in Pets
CE Requirements by State
Contests
Veterinary Heroes
Partners
Spotlight Series
Team Meeting in a Box
Toolkit
Top Recommended Veterinary Products
Vet to Vet
  • Contact Us
  • Fetch DVM360 Conference
  • Terms and Conditions
  • Privacy
  • Do Not Sell My Information
  • About Us

© 2023 MJH Life Sciences and dvm360 | Veterinary News, Veterinarian Insights, Medicine, Pet Care. All rights reserved.

Advertisement
By Role
  • Associates
  • Owners
  • Practice Manager
  • Students
  • Technicians
Subscriptions
  • dvm360 Newsletter
  • dvm360 Magazine
  • Contact Us
  • Fetch DVM360 Conference
  • Terms and Conditions
  • Privacy
  • Do Not Sell My Information
  • About Us
  • MJHLS Brand Logo

© 2023 MJH Life Sciences™ and dvm360 | Veterinary News, Veterinarian Insights, Medicine, Pet Care. All rights reserved.

How to buy the practice of your dreams

April 1, 1998

Many associates dream of a fixer-upper they can buy for nothing down and low payments, then turn it into a $1 million practice overnight. I hear an occasional success story, but most new owners experience something different.

By Don Dooley

Many associates dream of a fixer-upper they can buy for nothing down and low payments, then turn it into a $1 million practice overnight. I hear an occasional success story, but most new owners experience something different.

In doctors' minds, a "little old veterinarian" who only worked three half-days a week owned the struggling practice. Success simply requires a practitioner who will offer clients veterinary medicine six days a week.

Advertisement

That may be true, but there are other considerations. Like a fixer-upper home, it's nice to live someplace else while you're remodeling. If the practice will be your only income source, assume you're enrolling in a three-year weight-loss program. Most practices can be transformed in three to five years. In every hospital, perhaps 30 percent of clients want expanded services. Others like existing services or low charges. If all goes well, your top 30 percent who buy more will offset the bottom 30 percent's loss. Then income will remain constant until client numbers grow.

Initially, the effort of changing and educating provides excitement and challenge. But some veterinarians get depressed after a few months or years. Although I wouldn't discourage anyone from buying a fixer-upper, realize the work ahead to achieve your dream and keep it from turning into a nightmare. Hard and sometimes frustrating work can lead to a healthy, satisfying practice.

Fixer-uppers appeal to young veterinarians because they believe they can't buy a more successful practice. That's not true. In fact, it may be easier to buy a successful practice than a struggling one.

Assume a doctor has a $50,000 down payment and finds two practices, each with 40 percent profit, that cost one year's income production and $50,000 down. How do the hospitals stack up?

Say practice A costs $200,000 and makes $80,000 profit. Payments on the $150,000 balance will be about $24,000, leaving the buyer $56,000 to cover relief help for time off and living expenses.

Practice B costs $500,000 and makes $200,000 profit. Payments on the $450,000 balance will be about $72,000, leaving the buyer $128,000 to hire an associate and pay living expenses. Hiring an associate for $48,000 would still leave $80,000 for the buyer.

The distinction between hospitals A and B are down payments--25 percent for one and 10 percent for the other. Down payments are negotiable. But don't forget the importance of maximizing your down payment. An extra $30,000 down will greatly impact your interest payments over 10 years.

When negotiating, remember that a practice purchase is like a high-stakes poker game--the deck has many cards. Selling price is just one card. Others include the down payment, terms (number of payments), and interest rate. And don't forget the practice's lease or real-estate payment and acceleration of a lease payment.

But the critical number is how much the buyer has to live on after paying the seller, lease amount, and taxes. Sometimes buyers or sellers become emotionally attached to a price, interest rate, or terms and let that attachment destroy negotiations.

Finally, remember that half of the practices listed aren't really for sale. Many young veterinarians waste $5,000 to $15,000 trying to buy a practice that wasn't for sale. The owner was sincere when advertising the hospital but wasn't emotionally prepared to part with it. Unless the practice owner is deceased, there's no guarantee the seller will sign the closing papers. Trust your gut feelings or a broker or consultant who's assisting you with the purchase. If you feel the sale won't be completed, you're probably right.

Recently, I asked a doctor who listed his practice for sale two years ago whether he'd sold it. His answer was similar to many colleagues': "No, but it sure was scary. A young veterinarian offered my asking price and had the down payment. Fortunately, I got out at the last minute," he said. This honest veterinarian wanted to know his clinic's marketability but wasn't emotionally ready to sell.

So before you buy any practice, consider the result--you're purchasing your financial future. Don't shortchange yourself with a practice that can't support your dreams. And don't assume a deal is final until you get the keys.

The author, a Veterinary Economics' Editorial Advisory Board member, is a practice-management consultant and speaker in Los Gatos, Calif.

April 1998 Veterinary Economics

Related Content:

Buying or Selling a Practice
GoodVets launches in Tampa with opening of new veterinary hospital
GoodVets launches in Tampa with opening of new veterinary hospital
Terravet and the future of veterinary real estate ownership
Terravet and the future of veterinary real estate ownership
A closer look at veterinary real estate
A closer look at veterinary real estate

Advertisement

Latest News

Maryland Zoo giraffe Willow dies suddenly

3 Must-sees from the Fetch Charlotte conference

Morris Animal Foundation appoints new chief program officer

CDC issues warning over cat-transmitted sporotrichosis

View More Latest News
Advertisement