Planning the perfect exit strategy takes time. If you are thinking about selling your practice at any point in the future, it is important that you start working on your exit strategy as much as five years in advance. However, even three years is enough to start improving the saleability of your practice. Here are the four steps you need to start taking today to prepare for the sale.
Speak to a Veterinary Practice Broker First
It may have been years since you bought or sold a practice. It is best to enlist the help of someone who manages deals on a regular basis to give you a solid understanding of how your practice will be valued in the current market. They will be able to guide you toward the most important numbers and tell you how to improve the standing of your practice in preparation for a sale.
Start Reducing Expenses
Valuation of veterinary practices is based largely on profits. Even a small reduction in your monthly operating expenses can really improve the look of your profits to an appraiser. You don't have to suddenly cut payroll or stop buying supplies to make it happen. Just scale down as little as one percent at a time and you will see results over the course of 2-3 years.
Get Your Real Estate in Order
Whether you own or lease, there are considerations that need to be made for your building. If you do own, you need to have the property appraised and inspected to ensure there are no unexpected surprises from OSHA, the EPA, or any other governing body that could hamper a deal.
Prepare Your Staff
You don't have to tell your staff outright that you're going to sell and they need to get ready. What you should work on is securing non-compete agreements from your veterinary staff and make plans for a successful transition of ownership. A standard non-compete is good for 1-2 years after the employee or associate ceases working at the practice.
These are just four of the most important steps in creating a solid exit strategy. As you work with a broker, you will cover many other aspects of your practice that will be affected by the sale. The ultimate goal is to have your practice looking and operating presentably when a potential buyer comes to evaluate whether it is worth the investment.