For those wondering whether they should sell their veterinary practice now or wait, the answer is sell now. There are both economic and demographic trends in play that will affect the market and reward those who are aware of them.
Once the great recession happened in 2008, practice collections and values decreased and those with plans to sell decided to delay until the economy returned to normal. Those veterinarians have been waiting for six years to fully recoup the value that they lost throughout the recession. Those veterinarians who were 67 years old in 2008 are 6 years older and are running out of time. While the stock market has fully recovered, and is hitting all-time highs, veterinary practice real estate has not returned to its 2008 value. However, real estate is making a slow climb and most veterinarians’ real state notes are less, their real estate equity is more, and their practice itself has returned to, or exceeded, 2008 numbers.
In addition, the famous baby boom in America began in 1946 and continued until 1964. In other words, approximately three years ago, an increased number of veterinarians began turning 65 and will continue to do so for the next 18 years. This will also result in a sustained increase in supply.
When that convergence takes place, we will not have the ordinary amount of veterinary practices on the market for sale. Six years worth of veterinary practices will be put on the market for sale in a short amount of time. The supply will exceed the demand and market factors will prevail. The ability to sell will diminish and pricing will fall.
A critical question in the decision of when to transition also revolves around the number of buyers in the market - or the demand. Commercial operations, which often employ recent graduates, allow young veterinarians to join the profession without joining a private practice. In other words, the recent graduate can choose to delay buying or associating with a private practice for years, or indefinitely if they so choose.
Investments are all about timing. Consider the market forces when deciding when to sell your veterinary practice. Consider selling while there are many buyers and not enough veterinary practices for sale. Consider receiving fair market value for your practice instead of selling at a steep discount.
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