If the time has come to begin thinking about selling your veterinary practice, selling your practice to a partner may be the simplest and most logical thing to do. You will gain the reassurance that the practice is in good hands, while staging the sale in a way that allows you to leave it comfortably. However, there are some considerations to make before you go ahead with this plan.
How to Organize the Sale
In order to successfully manage selling your practice to a partner, you will need to begin thinking about how you will go about transferring ownership of the company. Most owners begin by selling a smaller stake in the company up front and allowing the associate to buy a larger percentage of the company over time. This allows them to phase in to ownership at a pace that is comfortable for them, while allowing you to step aside a little at a time. However, associates should be thinking ahead as the value of the company will continue to grow over time, so buying 10 percent today and 10 percent next year may cost very differently. Even when selling to an associate who is already within the practice, it is very important to have an appraisal done by a qualified professional. As a seller, you need to think ahead to determine how much of a stake you want to sell at first. Remember, if you sell too little, the associate may be disinterested and unmotivated. If you sell too much, you could be missing out on profit you may need for retirement. Prepare to negotiate.
Who Is in Charge
Perhaps the greatest challenge of selling your practice to a partner is avoiding managerial conflicts during the transition. Before you sign any portion of the business over to your new partner, you need to be in agreement about who will be calling the shots. There are many ways to go about this. First, you could decide to delegate specific areas of the business to one party or the other. If you are committed to stepping out of the business altogether, you may want to give your partner more managerial power and let them steer the ship. However, it is also common for both parties to set a dollar value and agree that any decision over that dollar value needs to have joint support. However you decide to break up responsibility within the practice, the most important thing is to have it all in writing to ensure that everyone involved understands their role. Hiring an advisor to make this arrangement can save you a lot of headaches down the road.
There are many reasons that selling your practice to a partner can be beneficial. Just keep in mind that this arrangement will require more negotiation and concessions on your side as you work hand in hand with someone long term, versus selling the business outright and stepping out of it altogether.