Putting a practice up for sale is a huge endeavor, involving emotional pangs and hefty financial considerations. Following are five things you need to do before putting your practice up for sale.
1. Develop an Exit Plan
Most retired veterinarians and sales brokers stress that having an exit plan, tailored to your own needs and wants, is as important as the decisions you made when you entered the profession. Before you put your practice up for sale, make sure that you are ready to retire, or have alternative plans. Most veterinarians have worked every day, at a job they love, and are at a loss if they retire prematurely. Phasing out of a career allows you to transfer your dedication to other activities, or reduce and focus your work schedule in other ways.
2. Determine Practice Value
A sales broker can provide a realistic fair market value for your practice. They add authority and credibility to the asking price, and document the appraisal supporting information. It is difficult to identify the “best” time to sell, but you can plan ahead with your sales broker about factors that influence price that are within your control. Knowing the value of your clinic gives you flexibility. If you can ask for a good price, you may have options to sell now, or work for a time to position the clinic to sell for a higher value.
3. Evaluate Tax Implications
After a practice value as been established, consult with your CPA about the money you will receive after taxes have been paid. Once you and your CPA determine the post-sale tax implications, you can develop your sale proceeds strategy, which may include the use of a 1031 exchange for a real estate sale. Don’t wait to get to the closing table to discover you don’t have enough money to do what you want to do.
4. Make Pre-Sale Improvements
A buyer’s first impression is critical. Your sales broker can help you identify the variety of aspects that help enhance appeal and positively influence the practice value, such as:
- Thoroughly cleaning, repairing, and cosmetically enhancing the facility.
- Upgrading the facility to modern standards, including computerization and up-to-date technology.
5. Update Records
Once you put your practice up for sale, you will need to have an extensive packet of information available for buyers. Your sales broker will identify the required documents, and once compiled, will organize a sharp, easy to read packet that includes financials, contracts, leases, and employee records.
Your seller to-do list will include:
- Compiling a business history
- Verifying that any facility lease has a term of at least five years and is renewable
- Updating inventory, equipment records, and valuations
- Obtaining assignable, non-compete agreements from any associates
Stay ahead of the game by following these steps before you put your practice up for sale. The process will be much smoother, and you will be assured of a financial transaction that works for you in the future.
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