What you should know about buying a practice.

The purchase of a practice will be one of the largest transactions of your career.

It’s complicated and mistakes can be costly.  That’s why you want a broker who specializes in veterinary practices – like PS Broker – as your Buyer’s Representative.  Your agent will guide you through the process, handle the negotiations and paperwork, and then bring you to a smooth closing.  So, the first thing you should know before buying: Get a buyer’s representative, and get one that knows veterinary practices.  And with PS Broker, there are no up-front fees.  Here’s some other things you should know before you buy:

You Should Know That You May Not Be Management Material:  Buying a practice may not be your best choice.  Being a good veterinarian and being a good business manager are two separate skill sets.  Picture yourself working as an office manager – maintaining client records; hiring, firing and scheduling employees; paying bills and taking payments, for example.  You may be happier as an associate, allowing you to concentrate on medicine instead of administrative details.  Or, as many owners have found, hiring an office manager is the perfect solution.  PS Broker can help you explore your ownership options and identify a safe and sensible investment.  Remember, your agent and your lender – in fact, everyone involved in your purchase – wants more than a quick deal; they want your continued success.  So, think about what you like to do and what you’re good at, and your team will find a practice that’s right for you.

You Should Know Where and What You Want To Be:   Practices are available all over the country, in all kinds of settings, from rural to urban.  Since you’ll be living there, you’ll want a lifestyle that appeals to you and your family.  PS Broker works throughout the country and understands the local market and their economies.  In addition to the geographic location, you should know the type of practice you want – small animal, large animal, specialist – and the workload you prefer.  Do you want a modest, turn-key operation that gives you plenty of time at the beach?  Or do you want to grow and expand a practice to its maximum level?

You Should Know Who You Want To Work With, and When:  Do you want to work solo?  With partners, or associates?  With relief doctors?  Do you want a large staff, or just a receptionist?  What kind of hours do you want to work?  Weekends off?   And what about emergencies and after-hours calls?

You Should Know This About Start-Ups:  The decision to start a new practice will involve a survey of the local market, competition, suitable locations, and other factors.  A start-up will have – for a while – no clients and no cash flow; it will have an immediate accumulation of debt and scheduled payments.  Employees will have to be interviewed, hired, and trained, while procedures and processes are defined and implemented.  It’s generally easier and safer to acquire a going concern with an existing clientele, an experienced staff, and predictable cash flow.  Lenders will consider start-ups, but closing costs are high.

You Should Know This About Financing:  Financing is readily available.  Since veterinary practices tend to have proven track records and solid documentation, lenders consider them to be safe investments.  PS Broker will help you pre-qualify for both conventional and SBA loans.  Then, we’ll put you in touch with lenders who specialize in veterinary practices.  We won’t recommend one over the other – the choice of lender is up to you.  An associate doctor with good credit might be surprised at how much can be financed, allowing them to get the perfect practice in the perfect place.  Veterinary practices can often be acquired with little or no down payment.   As mentioned above, good credit is important.  PS Broker understands the complexities and options in today’s financial market, and works successfully with lenders industry-wide.  When you are ready to buy, you’ll be pre-qualified and able to move quickly.

You Should Know The Practice Philosophy:   Emotions can play a surprising role in the sale of a veterinary practice.  Sellers care about their clients and their staff; the practice is their legacy.  If a seller is uncomfortable with a buyer’s approach, he may decline the offer.  As a buyer, you should understand the principles embraced by the doctor, and be prepared to continue them.  Sudden changes after a transfer can be unsettling to both the staff and the clientele.  It’s also true that most practices will need some revamping, and gradual change is the proven approach.  This is also true with the equipment.  The purchase of the practice will include the equipment shown on the equipment list, along with a 1-month inventory of supplies.  New owners are often tempted to spend money on equipment upgrades, which can cause financial stress.  As part of their analysis, PS Broker will help you arrive at the best plan for equipment use and upgrades.

You Should Know What It’s Really Worth:  Once you’ve identified a property of interest, your agent will analyze the finances, assets, and operations of that practice.  You’ll want to visit the practice as soon as possible and see the area firsthand.  PS Broker has been appraising veterinary practices for more than 30 years, and when an offer is made, it will reflect the fair market value and reasonable prospects of that practice.

You Should Know That Obstacles Often Show Up:   After signing a purchase contract, don’t be surprised when last-minute obstacles appear.  All regulatory, zoning, and environmental requirements will have to be met by the seller, and this is when your agent will verify that any such issues are being resolved.  Lenders can also encounter delays in processing your application. Your agent at PS Broker has seen it all before, and will handle it while keeping you informed.  If negotiations are re-opened, you can expect most sellers to be fairly accommodating when they have a qualified buyer who has come this far.

You Should Know About The Transition:  In most cases, the retiring doctor is willing to stay on for a specified amount of time, giving you a chance to come up to speed.  Some are interested in serving as relief doctors on a long-term basis.  These contractual options are negotiated by your agent during the purchase process.  The support staff is a major asset of any practice, and PS Broker will help you prepare for the retention and continuity of staff members.  PS Broker will also provide you with a free post-sale appraisal to see how you’re doing.  This checkup can identify problems before they become problems, and since we have our fingers on the pulse of the industry, we’ll be able to share what’s working for other doctors around the country.

You Should Know About Non-Compete Agreements:  A non-compete agreement will specify that the seller cannot compete with you in the future, within a certain distance.  The period of the non-compete and the area will largely depend on the population density and competitive factors.  For example, in an urban setting with many existing practices, a typical non-compete would be for three years and five miles.  In a rural setting in which the practice has little competition, the non-compete might be for five years and a hundred miles.  The legality and enforceability of non-compete agreements is changing, however, and PS Broker is closely following these developments.

You Should Know The Basic Rules:  Confidentiality is expected and practiced by buyers, sellers, and their agents.  This benefits all parties, so understand the importance of discretion.  Remember that all negotiations are to be handled by your agent.  And, for example, a visit to the practice should certainly be coordinated through your agent.

With an understanding of these basic facts, and with the help of the professionals at PS Broker, you can begin your career as a business owner with a solid foundation.  For more information, contact us about Buyer Representation and we’ll get you started on the path to owning your own practice.

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