Experienced, dedicated veterinarians know the intricacies of animal care, but they typically don’t realize the complexities involved in the selling of their practice. It seems simple enough: Put the business up for sale, advertise, and make a deal with an interested buyer. Unfortunately, there are numerous pitfalls along the way that put a successful sale at risk, or that significantly lower the value of the business. The following are four common mistakes practice sellers make.
1. Failure to Make a Long-Term Plan
Quite often, practice sellers fail to make a long-term plan. Most veterinary practices do not sell overnight; instead, a seller must realize that the sale process may take years to complete. Many sellers don’t fully realize the numerous requirements that should be completed before the practice is listed for sale, such as making sure that all records, financials, and legal documents are up to date. The physical facilities need to be cleaned, modernized, or modified, prior to the listing. A long-term plan will ensure that records are up-to-date, and a complete business history and sales portfolio are available at all times, during the listing period. Interested buyers may walk when a seller does not have the information they require. Insufficient documentation often lengthens the time it takes for a buyer to reach a decision, and frequently reduces the price offered for the practice.
2. Lack of Objectivity
Veterinarians who have worked for years to build up a practice often have a huge emotional investment in the business. Selling the practice, while a business decision, is often accompanied with strong feelings that make it impossible to be impartial. The lack of objectivity makes it difficult for a seller to take a hard look at the business and assess its successes, along with its shortcomings. This subjectivity prevents a seller from realistically determining the actual value of the business, and hinders his ability to acknowledge its flaws. Unrealistic expectations seldom materialize.
3. Lack of a Screening Process
Sellers may have numerous potential buyers when they put up their practice for sale. Some buyers may inquire with serious interest, while others may be simply window-shopping. Some serious buyers are not able to pre-qualify for a loan. Without a screening process, sellers will spend a great deal of time discussing the practice and reviewing the details, which takes valuable time away from continuing to build their business.
4. Loss of Confidentiality
Some sellers discuss their business with prospective buyers without having them sign a confidentiality or non-disclosure agreement. This lapse allows the business’s proprietary information to be shared with the public, other people, or other organizations. When selling a business, it is often desirable to keep the matter private so clients and employees are not adversely affected. Loss of confidentiality can have such detrimental effects on a practice, it can lower the value.
The first mistake practice sellers make is not seeking the help and advice of a professional broker. That is really the one mistake you don’t want to make.