Jim Stephenson, DVM – Simmons Northeast
It is no secret that many practice owners would have already sold their practice were it not for the uncertainties lingering as a result of the recent economic downturn. As we adjust to the “new” economy, and our youth becomes increasingly distant, the need to let go and move on becomes more apparent and harder to avoid. If you have managed to recoup your retirement investments and find your practice has stabilized, 2012 may the time to pull the trigger. All conditions are positive for a successful outcome.
• Buyers are in the mood to buy. The number of buyers compared to the number of practices on the market is greater than we have seen in many years.
• Financing is readily available to your buyer. There are new and active lenders looking for loans. The established lenders in the profession also continue to compete and provide loans with the lowest interest rates and most flexible terms in modern history.
• Reduced tax on the sale may expire at the end of 2012. The coming expiration of the Bush tax cuts means that by the end of 2012, the long-term capital gains tax rates will increase (unless Congress passes legislation extending the lower rate.)
• Consumer confidence seems to be on the rise. Having a successful year as the practice goes on the market results in buyers and lenders having greater confidence in the purchase.
In short, the market is bullish for practice transaction activity.
Who is buying?
Our most common buyers are relatively young veterinarians, three to eight years out of school. Other practice owners are also becoming more active in acquiring local practices in many regions. Financiers have programs that work for all classes of buyers as long as their credit is good. Some sellers may think the market is limited to a corporate acquisition. However, there is usually no need to go the route of a corporate buyer as financing is available to individual buyers for practices of all sizes.
What practices are selling?
Generally this is a function of geography and demographics. Apart from this, all sizes and shapes, from solo to multi-million dollar practices are selling, as long as they are priced fairly.
How do I know if the time is right for me?
If you are contemplating a sale but are unsure, have a valuation consultation done early in the year to help you assess the likely outcome. If you decide to move on it, choose your team wisely to make the process happen as efficiently as possible. A reputable, ethical and established veterinary broker/appraiser will expedite the process and increase your chances of a positive experience and equitable outcome. If real estate is being sold or leased your broker must be licensed or have an established relationship with a broker in your state to comply with state real estate laws. Once into the contract phase choose an attorney independent of the transaction to best protect your interests. Your broker should not be your attorney. Attorneys specializing in the veterinary industry know the nuances of this type of transaction and can be a great asset. Tax advice from your CPA regarding the transaction should be explored before you decide to list the practice, but also at some point during the transaction as well. Discussions with your financial advisor will help you know where to put all that money you get from the sale!
Maybe 2012 is the year for you!! Fair Winds and Smooth Sailing.