Selling your Veterinary practice? | Selling up, not selling out

A4G’s Veterinary Specialist Accountant, Josh, wants you to make the most of your life’s work!

Selling to a larger company doesn’t mean you’re selling out. Not having a plan at all… now that is the real mistake!

The veterinary industry is going through a very odd time.  Practices are growing despite issues with being able to recruit the right people and retain a committed and loyal staff base. But independent practices are selling to the major corporate players in droves.  The market for buying up practices is very active and with some crazy prices being paid.  You could say it is a bubble or you might think we are climbing to the peak of an economic cycle.

However, if you are a practice owner you are posed with a question. How long do you ride the bubble risking that it pops before you put your life’s work up for sale?  I have recently read an article that discussed how the economic model lends itself to 18-year cycles.  The recent speeding up of acquisitions by the big players may suggest that practices are letting go of the rising balloon now because they don’t see much future for the bubble.

Sometimes, in my experience, there is an element of panic selling.  The value now is just too good. It is just too appealing to have the headache of running a practice taken swiftly away. The key is having a plan now, even if you won’t sell up or retire for fifteen or twenty years or more.  You must have an idea of where your journey is going.  You may change the exact destination that you want to reach from time to time but knowing the direction you are generally heading in is vitally important.

What could you do then?

1. Sell to a larger company (in the veterinary industry we usually refer to this as selling to a corporate)
2. Sell to another vet
3. Bring in new partners
4. Close it down and sell off any assets

These options are ordered in accordance to the sort of return that we would expect you to get. Usually, your practice is of the most value to a corporate.  Second, it would be valuable to a competitor or other Veterinary professional who is in the market. The third option is the most interesting option because although it will not always bring in the biggest instant value, you have more options to earn over time.  Bringing in a partner to your business could mean selling a share to them but can mean that you retain an interest even when they are the main person running it.  When the bubble bursts I would not be surprised to see this option becoming the new number one ranking in this list.  The fourth option is the worst and usually is reserved for a practice that is not viable.  If the practice is not viable then you are likely to lose money on closing it, not make money!

This time next year Rodney…

Getting your plan together from day one is vital. Why? Because you may get an offer to buy that is better than your wildest dreams, and you may want to snap it up. Without the right planning in place, you could snap it up only to find that your tax position is all wrong, and if you were really not prepared you could lose over 50% of the sales value in tax! Structured right, it could be lower than 10%.

Action plan:

1. Who would you most like to sell to?
2. Get a valuation done, and update it every few years (you would value your pension pot annually, why not your business? It is your life’s work after all!
3. Know what assets you would retain, e.g. would you keep the practice building?
4. Talk through the plan with us, we can advise on the current tax exposure to help you fine-tune the plan

Josh Curties is our Veterinary Specialist Accountant and has a wide range of experience in growing practices. This has led to him having a wide range of experience in helping practices get the most value when it comes to selling up. The power of an honest discussion has never been so high.

So before you put up that “Veterinary Practice for sale” sign or seal a deal with a buyer, contact Josh for all the help and advice you need. Who wouldn’t want to save tax when selling their Veterinary practice?