The New Year brings with it the time when practice owners review their strategic plan and business goals. Many of the owners we talk to are wondering if this is the year to consider selling their practice. There are several reasons why it would make sense to sell in 2011.
One is that commercial financing rates and terms are at an all time low, and buyers are clamoring to take advantage of that. For example, very high grossing practices are still being purchased with very low down payments (typically $5–$10K) and about 85 – 90% commercial financing.
Secondly, even in our current economy, buyers exceed sellers and we have a robust veterinary practice exit market. There are fewer practices on the market since some owners lost investment money over the past couple years and are having to stay on a bit longer than expected to try to recoup those losses. Of course this makes it very much a sellers market.
Thirdly, some owners are afraid that their practice value is down since the practice has not grown as it once did. At Simmons we recognize this is a short term problem as long as it is related to the economy alone and not some other extraneous factor such as a new practice opening nearby or some other internal management problem. Accordingly, earnings are still capitalizing at historical rates; plus we factor in a long-term-stable growth rate. So values are holding their own very well.
Lastly, current income tax rates are on hold until only 2013.
There are many factors that determine the best timing for selling a veterinary practice — the financial condition of the company, valuation, growth cycle, profit history, and the current market. So how should you determine if 2011 would be the right time for you to sell your practice? Start by getting a practice valuation to determine what your practice is worth in the current market. This initial step will help determine if a sale would meet your objectives.
Is Now The Time To Sell(PDF of article)
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