Baby boomers are getting older. Today’s average baby boomer is approximately 63 years of age, and by 2025, all baby boomers will be over the age of 60. For those in the veterinary industry, this has clear implications on the number of practice owners exiting their business.
Baby boomers are unique, and unlike Generation X’ers who value time, traditionalists who value community and family, and millennials who value individuality, baby boomers value success and are known for their 60-hour workweek.
These two attributes – working hard and being successful – should also play a role in how baby boomers approach their exit. “Be Prepared,” and your exit will be successful. Preparation will also ensure exiting owners will cope well with life after working 60+ hours each week for so long.
Helping Practice Owners Avoid Regret and Prepare for the Unexpected Exit
The Exit Planning Institute estimates that 50% of business exits are involuntary, meaning they are unplanned or unexpected.
If fortunate, you will experience an unplanned exit because you received an offer for your practice you did not expect. If you do receive an offer, we would advise that you not accept the first offer without seeking professional advice. It is likely not the only offer available, nor is it likely to be the best offer.
However, most involuntary exits are due to death, disability, divorce, or disputes.
The EPI Exit Planning Process
The Exit Planning Institute (EPI) has a proven process for business owners to follow to help ensure a successful exit. Engaging in an exit planning process allows owners to better prepare for an unplanned departure at any time.
EPI’s Value Acceleration Process is grounded in action and creates a roadmap to success in three areas integral to a successful business exit.
- Maximizing business value
- Personal financial planning
- Life after business planning
The Value Acceleration Process focuses on value growth across all areas and aligns your business, personal finance, and personal goals for life after business. It takes what can be a complicated and often overwhelming, 3-5 year business strategy and turns it into a manageable 90-day process. The process also answers the question, “What can I do in the next 90 days to move in the direction of my long-term exit strategy?“
Repeating the 90-day cycle leads to continuous improvement.
The Value Acceleration Process involves 3 phases.
- Discover. This phase focuses on exploring where you are currently in your business and personal life and what actions are needed to get to where you want to be in the future.
- Prepare. In this phase, you implement the action plan.
- Decide. With more information, you are better prepared to decide on selling or keeping the business.
The first step in the Discover Phase is to have your business valued by a qualified business valuator with experience in the veterinary industry. Owners need to know the value of their business and the potential value if they act and make improvements based on what they learn in the valuation.
If you focus on value first, income and revenue will follow. If you focus solely on revenue or income, value does not necessarily follow. It is important to remember that value considers the risk of generating revenue and income in the future.
When you go through a business valuation process, you identify business risks affecting your future revenue and income stream. Once you identify the risks, you can create action items to de-risk your business. Business valuation also determines the value drivers that can improve the value and, in turn, improve revenue and income.
Financial and Emotional Success
Success in exiting a business and avoiding regret involves more than just maximizing value and price. It also involves personal financial and emotional success after the sale.
What is the owner’s financial requirement post-sale to support and maintain the planned lifestyle? Some practices don’t sell — is the owner still able to exit and enjoy the same lifestyle as when owning the business? If the practice is sellable, is the current value enough to support the owner post-sale? Engaging the services of a qualified wealth management professional can assist owners in analyzing their current financial status and future needs to ensure the next chapter of their life is as enjoyable and successful as possible.
Also, it can be an emotional shock to go from being an integral part of a vibrant business to waking up in the morning and wondering how you will fill the day. It may sound appealing, but the reality of a life without purpose can be devastating. Some exiting business owners struggle with self-worth issues after a sale. Days need to be filled with meaningful experiences, whether with family and friends, philanthropic endeavors, hobbies, or other business.
The next step in the Discover Phase is to analyze your weaknesses and areas for improvement that result from assessing your business value, financial goals, and personal goals. Next, pick 3-5 items pertaining to your business value and 3-5 items related to your personal financial goals and your plans to fill your time after the sale. Then, create an action plan around these items.
Once your action plan is made, you are ready to move to the Prepare stage to begin implementing the action plan – de-risk your business, work on value drivers, implement plans to ensure you can meet your post-sale financial needs, and prepare for the emotional part!
The process results in a more informed owner who can then decide whether to exit or keep the business and repeat another 90-day cycle.
Baden-Powell’s Scout’s motto: “Be Prepared,” has served the test of time. He wanted to equip young people with the ability to act quickly during an emergency. He wanted them to be physically ready for challenges that face them, and he wanted their minds to be prepared as well. The same principles apply to practice owners exiting their business. Are you prepared?
Simmons Is Your Successful Exit Strategy Partner
Start your preparation with a comprehensive valuation from the trusted advisors at Simmons. Whether you need expert advice, accurate appraisal services, or assistance in buying or selling a veterinary practice, we have the expertise and resources you need to achieve your goals. Contact us today to get started evaluating, buying, or selling a veterinary practice with peace of mind.
Elizabeth Bellavance DVM MBA is a Certified Exit Planning Advisor® with the Exit Planning Institute and is Simmons & Associates’ Canadian representative.