Maximizing a sale is all about perfect timing and as a veterinary practice owner, you should know when is the right time to hang the boots and put up your practice for sale. Practice owners are always caught up in the conundrum of whether to sell now or wait a little longer for the practice to gain more value. While that might seem like a perfect strategy, there are a few things to consider before making that decision. Most importantly, you need to be sure that your practice is actually gaining value through optimal production and sensible management. If not, you run the risk of selling your veterinary practice at a time when it is a buyer’s market.
Selling your veterinary practice can be a sound decision when you either plan on retiring or just changing your career preference. If the daily management is taking a toll on you, then you may think of how to sell a veterinary practice and take the responsibilities off your hand. At Praxisvet, we are here to ensure that you get the best value for your veterinary practice. Part of that lies in our free appraisals. Well, an appraisal can only be positive if you are selling at the right time. The idea is not to wait too long to sell your practice because of the following reasons
Avoiding a Buyer’s Market
There has been a rising demand for veterinary practice for purchase which meant that there were more buyers looking for vet practices to buy than there were sellers willing to sell. This demand led to sellers dictating the tempo when it came to price negotiations. As a seller, you would have easily found someone to buy your practice at your preferred valued price. This is what we refer to as a seller’s market. This kind of market is conducive and profitable for sellers.
The other scenario that we are slowly witnessing is the exact opposite. There are now more veterinary practices in the market. Although this trend is slowly picking the pace, very soon we are going to see a complete shift into a buyer’s market. If you are thinking of how to sell a veterinary practice without making a loss, it would be best not to wait too long so as to avoid the buyer’s market.
Avoid Being Forced into a Fire Sale
Consider the following case study.
“Two sons left to sell their father’s practice who has recently passed away. None of the sons is a veterinarian. The doors of the vet practice have been closed for several days and the clients are requesting their records to be sent elsewhere. Every minute that goes by without a veterinarian in this practice results in a dramatic decline in its value. Not only are there no profits being generated but the value of the client records is being shifted to competing practices. This becomes known as a “fire sale” and certainly selling in the valley.”
A fire sale is a very undesirable outcome but one that becomes inevitable when you wait too long to sell your practice.
Selling your Veterinary Practice at Its Highest Performance
The value of your veterinary practice is driven by two things; profitability and desirability. You may be able to hold onto your practice because you feel like its value is increasing by considering the revenues you are generating. Unfortunately, you may also be incurring high expenses which negatively affect your profits and hence reduce the value of your practice. To evaluate the performance and the value of your practice, you need to be keen on the profits and not the revenues. If your practice was making fewer revenues but more profits a few years ago but it is now making more revenues but less profits now, then it was a good time to sell it then than now.
There are many indicators of how well your practice will do tomorrow. You can use these factors to ascertain if the future is likely to be the period when your practice is at its best performance. If not, then consider selling it now when you are sure it is doing great.
Tomorrow might be the day that you run out of energy. It might be the time you consider to spend more time with your family and grandkids. When this time comes, you will have a minimal presence at your veterinary practice. This will, in turn, lead to poor management, poor decision making and ultimately poor productivity and less profit. All these will contribute to a loss in value of your practice and by then, selling your veterinary practice might be the only choice may be one which will not earn as much as it would if you had sold earlier.
Sell to Falling Behind the Competition
Finally, you may be forced to sell your practice to a buyer who is capable of catching up with the competition. There are times when aggressive competition becomes unhealthy for your practice and you may choose to stick to the traditional way of doing things rather than following the tide. Eventually, you will lose out to the competition and put your practice in a very unwanted state.
The alternative would be to sell to a ready buyer. Buyers are always aware of the latest trends in the market and hence are ready and willing to do what it takes to stay ahead of the competition. You will not only save the image of your practice but also get the best value for it if you choose to sell now rather than hold onto it.
Some of us want to sell at a time when we think of selling as the last resort. Don’t be the practice owner that drowns in the valley. It is always best to have a succession plan because it is impossible to predict what tomorrow holds for us. There are many reasons people chose to sell their veterinary practices. Whatever reason you have for choosing to sell yours, it is important that you exploit all avenues and ways of how to sell a veterinary practice so as to maximize its value. Be ready and don’t be late in selling your practice especially with the inevitable shift into the buyer’s market.
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