Get the most out of Selling your Veterinary Practice (1 of 3)

August 31, 2022

Hiring experts to help shepherd you through the sale of your veterinary hospital is a great idea on paper, particularly if you expect to entertain offers from private equity backed veterinary services corporates. The right expert will advocate on your behalf and always put your needs before their own.

The reality is quite messier. VIS has created a run down on some of the pitfalls a veterinarian might encounter when hiring a broker or lawyer turned financial expert.  A second order question might be, how do I get the benefits of hiring veterinary practice sale advisors when I sell my practice without exposing myself to the downside risk? The answer lies in people and incentives.  First some background, then we'll cover people. Incentives will be in part 3.

1.      Intro to Corporate Development

There are thousands of professionals in every industry across many functions whose trade is related to the acquisition or sale of assets, including veterinary businesses. Lawyers, accountants, brokers, sales people etc. In veterinary services, these Corporate Development professionals work on the “buy-side”, the “sell-side” or both.  

Professionals on the “buy-side” work for, or with companies that acquire veterinary practices, in most cases from independent owners. Buy-side professionals include 3rd parties such as specialized attorneys and accountants, as well as employees of the corporate buyers. The 3rd party attorneys and accountants tend to focus on business acquisitions, sometimes the veterinary industry particularly. Almost all corporate buyers have a team of business development professionals solely focused on sourcing and closing veterinary practice purchases.  

Professionals on the “sell-side” work for brokerages, legal firms and / or veterinary practices. Some attorneys and brokers make a living exclusively representing veterinary practice owners. Since it is not common for the seller, a veterinary practice owner, to have employees dedicated to helping sell veterinary practices, the practice owner may also be required to function as a sell-side professional. CPAs or financial planners may also help with certain sell-side tasks. These professionals may be knowledgeable about practice sales, but it is likely not their only area of focus.  

2.      Team Play

It may seem that the buyer who has approached you has your interests in mind, but that is not the case until the deal closes.  Everything that happens before that point can transfer value from your pocket to theirs.  Hiring the right team of experts protects you.  

It you match up the typical “buy-side” team members on a practice sale to the typical “sell-side” team members you can see how the buy-side team might be deeper and purpose built. Both teams have an attorney. The buy-side team will have accountants focused on practice acquisitions, the sell-side team will have their own CPA and or book-keeper, or possibly a specialist consultant. The sell-side team may have a broker but will also include the owner of the selling animal hospital and any individuals employed by the practice owner who will help with the practice sale. The buy-side team will include multiple corporate development professionals employed by the buyer performing various tasks– more specialists.

Assuming the practice owner is not a corporate development specialist, the broker, or financial advisor for the sell-side client will have to make up for any blind-spots the seller’s CPA and attorney may have, and, combined with the efforts of the practice owner, perform any tasks on the sell-side that a team of employed specialists perform on the buy-side.  

To fill these blind-spots effectively your financial advisor, or broker with need a variety of skills and experience. A career solely in sales, or law, or real-estate brokerage is likely not enough to equip a person to be effective in this role.  Those rare few individuals who have all that is required to be effective, don’t work for free, and are likely to have more lucrative opportunities in “big law”, private equity, or on wall street.

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