Kirsten Poppen, JD, AVA
We hear this question frequently in our office from concerned practice owners who are pondering the state of the economy. And understandably so, with daily media reports about a troubled economy, housing markets in crisis, the troubled banking scene, and, yes, recession.
Our honest answer to this question is, “No, you shouldn‘t wait to sell your practice. Now is still an excellent time in the veterinary marketÃ¢â‚¬”and here‘s why:
Capital GainsTick, Tock: As it stands now, the beneficial Capital Gains tax rate is set to sunset the end of 2010. What does that mean? Generally speaking, the federal capital gains tax is a lower tax rate which is applied to part of your practice sale (often on the goodwill, or a portion thereof). When that lower tax rate, now typically 15%, expires, many speculate that it will increase. If the tax does increase, more taxes will need to be paid on your sale; i.e., less money realized to you. Talk to your accountant for specific advice, but it‘s something worth checking into if you are thinking about selling. (Also, keep in mind that it takes time to find the right buyer for your practice, so plan early.)
Interest Rates are Still Low for Buyers: Lenders are still offering great, low interest rates on practice and real estate loans. Lower interest rates make purchasing a practice more attractive to buyers.
More Importantly, Outside Financing is Still Available: Yes, MONEY for loans is still available for veterinarian buyers. It‘s this fact that often shocks inquiring practice owners most. In our experience, lenders like to work veterinarians for loans, and right now, commercial loans are still being made to buy a practice (and real estate).
Coincidentally, if you‘re a buyer reading this, much of this applies to you as well. Low interest rates, outside financing, and beneficial tax rates for the seller all work in your favor too when you find the right practice. If your goal is to be a practice owner, why wait? We have lots of profitable.
For a PDF of this article, click Here ~ Should I Wait To Sell My Practice?
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