As you prepare to sell your veterinary practice you should be working on an exit strategy well in advance. An exit strategy serves many purposes as you prepare for sale and can help you stay on track to meet major milestones. Here are four ways that an exit strategy works in your favor.
Planning Your Final Years in the Business
You should write your exit strategy as far as five years in advance of selling your veterinary practice. As you progress toward retirement or toward the sale of your practice, this should provide you with an annual timeline of tasks that need to be completed to make the sale feasible. This will also ensure that you are not rushing to clean up your practice in the last six months. You should take this time to make minor changes month to month to make this process more manageable.
As you reduce your role as active leader of your practice in the final months, your team members need to be prepared to ramp up their productivity and take control. Your team members need to be ready to operate under new management, but they also need to be able to function independently during the time that new management is making the transition.
The first year after selling your practice is arguably the most difficult. There are many tax implications and lifestyle changes that happen in those first 12 months. By creating a written exit strategy that includes your retirement plan, you can keep yourself on track even after you're out of the business.
Perhaps the most important piece of your exit strategy is how it will impact the valuation of your practice. Your goal should be to increase the value of your practice over the last five years of your ownership. This will ensure that you get the best return for all of the work that you've put into building your business. It will also mean that the appraiser will see a steady increase in the profitability of your practice over several years, as opposed to a sudden increase caused by drastic cuts to staffing or expenses at the last second.
Your exit strategy should serve as the lighthouse that guides you through your final three to five years of practice ownership. The act of writing out an exit strategy in the first place can force you to think about aspects of the sale that you may not have considered at first. Then it will help you stage the sale in a way that results in an adequate payoff.