– Larry Wiseman, DVM, Sue Wiseman, DVM
Simmons & Associates has been involved with a wide variety of practice sales over the years, and we have seen a number of problems that could have been avoided simply by planning ahead. One of the most common problems is non-compete agreements with the practice associates.
Consider updating non-compete agreements. To the extent that non-compete agreements are recognized in your state, update them to allow employed DVMs and other key employees to agree to the transferability of their non-compete agreements. This is one of the biggest potential problem areas when it comes time to sell. A clear understanding today will help prevent misunderstandings later on, when a potential buyer raises questions about the non-compete agreements and employment contracts in place.
Many practice sales never happen, precisely for that reason. It also makes good business sense to have employment agreements that contain appropriate non-compete language. According to experts, like Dr. James Wilson, J.D., an appropriate time frame for veterinary non-compete agreements is 2 years. The radius guidelines are:
1-2 miles for densely populated urban areas
4-7 miles for suburban areas
6-12 miles for suburbs not immediately connected to an urban area
10-25 miles for rural areas
Even if, as the seller, you are sure the employed veterinarians are leaving . . . don’t leave this up to chance. Make sure you have a non-compete agreement in place before putting your practice on the market. In our experience, in those states allowing non-compete agreements, most buyers today insist on having one in place for all currently employed veterinarians.