Frequently Asked Questions for Veterinarian Sellers
Do I have to pay out my staff vacation and sick time at closing?
Yes, after the sale has closed, you will write a check for accrued vacation time to your staff members. The staff will then start accruing vacation and sick time under the new clinic owner.
Paying out sick time depends on your individual state laws. Some states have recently implemented mandatory sick time. Some of the new state laws may require the employer to pay out accrued sick time to terminated employees. Selling doctors may feel generous and go ahead and pay their staff accrued sick time at closing even though the law doesn’t require it. That is the personal preference of the seller.
Be sure to check your employee handbook and if it states that an employee is paid out for accrued vacation or sick time, then you must pay it out no matter what the law says. Employees can file a court action against you to get their accrued and earned time paid.
When should I tell my staff and patients about selling my clinic?
In general, you do not want to tell your staff about selling your clinic until the documents are signed. People are averse to change and if you have staff members that are already thinking about another job opportunity, then you may lose them if you tell them that you are selling your clinic.
However, that being said, if you’ve had the same staff for 30 years and they are like family to you and would be upset if you didn’t tell them, then it is really up to you if you’d like to tell them or not. If you trust they will be loyal and stay on, then it may make sense to tell them.
When to tell also applies to your patients. About the same time as you tell your team, a letter approved by the buyer should be ready to go out to your patients. We have examples of these letters for your use. Patients want to know a little bit about the new veterinarian and that you and your team all trust and respect the new veterinarian. Depending on what you desire, you may want to host an open house at the clinic, invite your staff and patients, and as additional marketing, invite local residents or businesses.
If my family member also works in the clinic and wants to retire at the same time, will that be a problem?
It’s not a major problem but expect the potential buyer to ask your family member to at least stay on for a transition to a new employee. For example, if your wife is the front desk person, the buyer may want your wife to help train a front desk person for three to six months to ensure the success of the new person.
Will I be required to stay on and work on patients as part of the transition process?
Every transition and every buyer are different. Larger transitioning clinics with higher volume production may ask you to stay on and work in the clinic. Especially if there is enough production for another part or full-time doctor. For smaller transitions under $800,000 or so, the buyer may ask you to stay on for a couple of months, or at least to be available via phone or e-mail to answer questions about patients, staff, etc. We have found that after a couple of weeks, buyers typically realize they have things under control and will then let sellers know that they are free to fully leave and enjoy whatever their next chapter brings.
Do I shut down my corporation at closing?
There will be some bills to pay after closing and some other “clean up” of the books, so we recommend you leave your corporation open for six months to make sure everything is taken care of. If you have an accountant, let them take care of closing out your corporation.
What are the taxes owed at closing?
It depends on the state, but there will be a final personal property tax bill that you will need to pay. If you are using escrow, they will take care of that. If not, you can contact your tax authority or accountant and they can help you calculate what is owed. There may also be a proration where you pay part of the personal property tax and the buyer pays the balance.
For income tax, there is a final income tax bill to pay. It’s due on April 15 and paid as normal. Your accountant will fill out a “Final” tax return and inform the IRS that you are dissolving your corporation. The state you live in will also need to be notified that you have sold your assets and dissolved your corporation.
Can I slow down the production the last few months before the sale?
Argh No! Keep your production up and going — business as usual. One of the worst things you can do is to have production go way down the last few months and have the lender come back and ask for current reports. They’ll see the drop in production and question if the clinic is now worth what they valued it at. They may ask you to lower the price. You can relax after the sale closes.
What is included in the sale – Equipment, Goodwill, Accounts Receivable, Cash in the bank, all my personal possessions in the clinic?
What you are selling is the goodwill of the clinic and the equipment used to produce the services you have provided over the years. Standard protocol is 75% to 80% of the purchase price is allocated to goodwill, $5,000 to $10,000 towards the non-compete, and the remaining to equipment. Accounts Receivable are typically sold in addition to the clinic assets as a separate sale. Personal possessions are excluded from the sale, as long as they are listed in the exhibit in the Purchase Agreement.
Should I sell my Accounts Receivable to the Purchaser, or keep it? At what discount is the Accounts Receivable sold?
The majority of the time, we recommend that you sell the accounts receivable. The sales price for the accounts receivable, which is in addition to the clinic sales price, is 85% of the accounts receivable balance less insurance and other discounts and less any credit balances on accounts. Another method is 90% of the accounts less than 30 days old, 75% in the 30 to 60-day-old bucket, 50% for the amount that is 60 to 90 days old, and 5% for anything over 90 days old. If there are patients on payment plans, then those may be excluded from the sale or may be included depending on what is negotiated.
If for some reason you decide to keep the accounts receivable and collect the balances yourself, you will pay a collection fee to the purchaser of 5% to 10% depending on what you have negotiated.
Note: Attorneys state that accounts receivable disputes when the A/R is not sold is the number one cause for potential litigation. It’s simply cleaner and easier if the seller sells their A/R.
How long does the sale of my clinic take?
The amount of time it takes to sell your clinic is dependent on a number of factors. The first factor is how much you are producing. Higher producing clinics tend to sell faster than lower producing clinics. The second factor is whether you are in a small rural location or an urban setting. Clinics located in small, remote towns tend to take a while to sell. They can take anywhere from one to two years to sell. If production is low, they may not sell at all. The more urban the clinic, the higher the likelihood of the clinic selling quickly. Lately, we have seen that clinics within 30 minutes of a metropolitan area are selling better than clinics directly in a metropolitan area. The final factor is how many rooms you have. A three-room clinic will take longer to sell than a four-room clinic. For some reason, young buyers seem to think they need six to eight rooms to run a clinic. We try to educate them that four is plenty, but they listen to people on VetQuest, consultants, or other forums that make blanket statements that you need six to eight rooms. They don’t realize that the more rooms you have, the more rent you will be paying. Three and four rooms are just fine.
With those factors in mind, here are some general “rules of thumb” time frames. A clinic in a metropolitan area, or within 30 minutes of a metropolitan area will sell in approximately six to nine months. Some sell faster, some sell slower. Again, the size of the clinic matters. A rural clinic will take between twelve months to twenty-four months to sell.
Should I sell my building?
Do you want to be a landlord? Can you get a better return on the proceeds somewhere else? Is the current real estate market hot? Can the buyer afford to buy the building now? These are the questions to ask yourself. In the current market, we have been getting higher than market prices on real estate because a building is worth more to an owner-user than to an investor. Owner-users would rather pay themselves rent than pay rent to someone else. Thus, they would pay a premium to purchase the building they will be occupying. The final thought is do you want to take the risk of tenants leaving the building to go buy their own building and rendering your building vacant?
Selling empty veterinary buildings can be nearly impossible and it is worth more to the buying veterinarian. Perhaps if your space is right on the coast or downtown you may have options, but potentially still difficult and you may be offered less because any other business will need to do considerable remodeling. It can take up to twelve months or longer to lease a commercial building. If you have a specialized building like a veterinary clinic, you more than likely need to find a veterinarian to fill the space again. That might be a challenge. In a nutshell, if it’s a good market, I would suggest selling the building.
What if I want to stay on and work a day or two a week?
This may be possible if there is enough production/collection for both of you. The buyer and the lender will need the buyer to get the production in order to pay the loan and everyday life expenses. You may be able to stay on if you perform procedures that the buyer does not perform. You can talk about and make a plan for ways to increase collections. If you work back you will need to have a compensation and employment agreement negotiated and in place.
How is the sale price determined to market my clinic (and real estate)?
We work with you to gather the last three years’ clinic financial information and then have our certified CVA’s put together a valuation of the clinic using three different methods, which are weighted and averaged to determine the market value of your clinic. The valuation is then reviewed with you to gain a final agreement on a listing price.
The real estate price is determined somewhat like a home or any commercial real estate by reviewing comparable real estate in your area. Once we determine the potential listing prices for your clinic and real estate, we consult with you and set a final price.
What if I run personal expenses through my clinic and pay my kids who don’t hold a position?
The cleaner your books are the easier they are to understand and if they are too convoluted, some banks won’t trust the numbers and won’t lend the money. We expect some “adjustments” to expenses and income, you just need to let us know what these are.
Should I remodel or get new equipment before selling?
If your clinic looks like 1975, consider updated paint, flooring, and décor, but nothing over the top that is expensive or makes it unsettling to the average person. If your equipment is really old, talk with us and we can help you determine if anything needs to be updated or replaced.
What do I do with all of the proceeds from the sale of my clinic and building?
Please remember that anything you owe on either the clinic or the building will have to be paid at closing. Talk with your CPA and financial planner to help you determine the best investment options. You may have a retirement plan in place that allows you to sock away a lot of money and is tax-free. If you have another business or like being a landlord, you can discuss a 1031 exchange with your CPA. You will have to pay taxes, but perhaps you can reduce them by strategizing with your advisors.
How can I increase the value of my clinic?
If you are thinking about selling your clinic in the next three to five years, you can review and make strategic decisions to increase the bottom line to increase the value. Some basic improvements would be to increase the number of new clients/patients and production, and hold off on any major purchases unless necessary to maintain the current day-to-day operations. Enhance the appearance of the clinic and clean out any old clutter. If you are ready to sell within the next twelve months, it is hard to increase the value of the clinic because the value is based on the last three years of clinic financials. The most important thing if you’re ready to sell now or in the next twelve months is to maintain or increase the clinic’s production. New buyers and banks will be reviewing the clinic reports to verify if the clinic is holding steady or if the numbers are declining.
Are non-compete clauses in a purchase and sale agreement enforceable?
Yes, when written correctly they are. Always consult with your legal professional on any enforceable non-compete questions.
Should the Seller and Buyer have an attorney or an accountant/CPA involved?
We strongly recommend that seller and buyer each have their own professional attorney and accountant/CPA for advice on legal, financial, and taxation matters. Typically, the broker involved can make a recommendation of a veterinary professional if you don’t have one.
Should I use a Veterinary Broker?
After many years of hard work and investment into building a veterinary clinic, you’re now thinking about selling the clinic. It is easy to assume that the clinic will sell quickly and for a great price when you are ready to sell. Selling a veterinary clinic is not like selling a home, it is a complicated process. Determining the market value of the clinic, showing the clinic, finding the right buyer, negotiating the purchase price, drafting the asset purchase agreement, formulating the transition plan, negotiating the lease assignment, and obtaining clinic financing are just a few of the key areas where a potential clinic sale could become derailed. The expertise, experience, and guidance of the Omni Practice Group brokers can prove to be invaluable. Using a broker will typically save you a lot of time and money in selling your clinic.
Read MorePatient Record Audit: Suggestions for Buyers
By Megan Urban
– Randomly select patient records and review for complete documentation, full mouth diagnosis, necessary x-rays, and regular maintenance.
– Review the most recent three to five new patient records for charted existing and diagnosed “ideal” treatment, perio charting, appropriate x-rays, and confirm if the patients have their next scheduled appointments.
-Review the three most recent endodontic patient records to confirm if buildups and crowns were treatment planned and scheduled, or if treatment has already been completed.
-Review the three most recent prophy and SRP patient records to confirm the accuracy of treatment is captured in hygiene notes, proper documentation, and x-rays.
-Review the schedule for the upcoming weeks/months for all providers including hygiene. See how far out the hygiene scheduled is booked. In a strong hygiene program with a good recall and scheduling system in place, hygiene should be booked out five to six months.
-Review the schedule for the previous week to verify how many no-show or late-cancel appointments occurred. How were the no-show and late-cancel appointments documented? How are they tracked? Were the patients charged a fee?
-Run the Active Patient Count Report to confirm the number of active patients.
-Print the Detailed Treatment Plans Report (or Unscheduled Treatment Plans Report) and research several accounts to verify if treatment is truly needed, or if it was done and the treatment on the report is actually a second or third option. Is there sufficient dentistry left for you to do?
-Look at the Accounts Receivable Aging Report to determine if the amounts owing are from insurance or from the guarantor/responsible party. Are patients accustomed to paying their estimated portion at the time of service?
-Look at the Credit Balance Report (or Unassigned Credit Report). Credit balances can result from prepaid treatment, unposted treatment, incorrect insurance adjustments, or may be due to the patient or insurance company as refunds.
-Look at the Outstanding Claims Report for claims over thirty, sixty, and ninety days. Are the staff members responsible for the accounts receivable on top of outstanding claims? Look at the account notes for claims on the over ninety-day list to see why these claims haven’t been paid. Were they submitted with the correct codes, narratives, and necessary attachments?
-Look at the Month End/Day Sheet Reports for the past several months to see the production to collection ratio.
Read MoreInterview Questions for Every Dental Practice Role
By Megan Urban, Practice Transition Advisor
Businesses across the country are struggling with staffing issues and the dental world is NO exception. During the pre-pandemic years finding great staff was a challenge, but since the pandemic began finding and retaining great staff has become a tumultuous experience. What follows are some interview questions that have helped dentists and their practice managers sift through their potential candidates – when you can get candidates. And the increased competition for workers has made this an employee-driven vs. employer-driven market. You’ve got to know your budget and get clear on what additional perks or benefits you may be able to offer in this now highly-competitive hiring process.
General Questions for Every Role – Dentists, Hygienists, Office Managers, Dental Assistants, Front Office, and Sterile Techs
1. What are you looking for in a team and an office?
2. What does self-motivation mean to you?
3. What in particular motivates you?
4. How do you organize your day?
5. In a perfect world, how many hours per day and per week would you like to work?
6. How do you deal with conflict in the workplace? Describe a specific situation and how you dealt with it. Would you do anything differently now that you have had time to reflect?
7. How would the previous dentist who employed you describe you if I were to call him/her? What about the other team members, what would they say? Would they say you were on time every day? Easy to get along with? Fun? Great with the patients?
8. What do you think are your greatest strengths? And what are your greatest challenges?
9. Describe a situation when a patient was upset and describe what you did to rectify the situation or help.
10. What are three things you liked most about your last two positions/offices? What are three things you would have changed and why?
11. Describe a great day at the office.
12. What work situations, tasks, or duties cause you stress?
13. Where would you like to see yourself in two years. Where would you like to see yourself in five years?
14. If you weren’t in the dentistry field, what would you be doing? What are you most passionate about?
15. What qualities in a person do you think are important for this position?
16. How would you set the pay scale for this position? What qualifying events or skills would warrant a different pay scale or increase in compensation?
17. What do you think a bonus should be based on?
18. What benefits are most meaningful to you?
19. What have you learned during the pandemic? How did it affect your short and long-term goals?
20. Did you work remotely? Was that easy or difficult for you? How do you feel about being back in an office, working with a team, and having interaction with patients all day?
Additional Questions for Specific Roles:
Hygiene
1. Describe your normal routine with new patients.
2. What protocol do you follow with perio?
3. What are your thoughts about Arestin, rinses, etcetera.?
4. How do you talk with patients about perio disease? What if they have been undertreated and you are now proposing perio treatment?
5. What is your favorite part of being a hygienist?
6. What have you done in the past to build and grow the hygiene department in an office?
7. How do you discuss unfinished treatment and recall? Provide an example.
8. What do you do if you have a broken appointment? In other offices have you been expected to work your own recall and try to fill your schedule?
9. Are you comfortable working when the dentist is out of the office? (If it’s legal in your area?).
Dental Assistant
1. Have you been involved with placing dental supply orders? Explain your process.
2. What have you normally done during downtime?
3. How do you talk with patients about unfinished treatment and recall? Provide an example.
4. What are your most/least favorite procedures?
5. Describe the perfect dentist to assist and why?
Office/Practice Manager
1. How would you describe your management style?
2. What are your thoughts about micro-managing?
3. What steps do you take when you realize that you have made a hiring mistake?
4. Do you enjoy being at the front desk or in an office behind the scenes?
5. What do you bring to a team to keep them motivated and smiling?
6. In your previous office did you have full responsibility for the accounts receivable? What was your average production to collection ratio?
7. In your previous offices, how would staff describe you?
Front Office
1. How do you welcome new patients to the practice?
2. What have your past responsibilities been? Which did you enjoy most?
3. How do you talk with patients about treatment costs? Provide an exact example of presenting treatment and negotiating a financial arrangement.
4. How do you discuss unfinished treatment and recall?
5. How do you describe a perfect schedule and how do you create it?
6. How do you fill any last-minute appointments?
7. Do you enjoy recall and scheduling?
8. How much experience have you had setting up insurance, submitting claims, and following up with insurance companies for payment?
Dentist
1. What does a perfect schedule look like to you?
2. What is your perio protocol?
3. How do you encourage patients to finish incomplete treatment?
4. How do you ask for referrals from existing patients?
5. What do you do at a new patient appointment?
6. What types of procedures do you most enjoy?
7. Are you comfortable being the only dentist working in the office?
8. What is your typical production per day?
9. How would your current/past dental assistant describe you? How would an owner doctor or office manager describe you?
10. What are your goals for each patient and each day?
11. Is this office located outside any current non-compete you may have?
12. Will you be able to legally bring any patients with you?
Interview Questions for Every Veterinary Practice Role
Businesses across the country are struggling with staffing issues and the veterinary world is NO exception. During the pre-pandemic years finding great staff was a challenge, but since the pandemic began finding and retaining great staff has become a tumultuous experience. What follows are some interview questions that have helped veterinarians and their office managers sift through potential candidates – when you can get candidates. And the increased competition for workers has made this an employee-driven vs. employer-driven market. You’ve got to know your budget and get clear on what additional perks or benefits you may be able to offer in this now highly-competitive hiring process.
General Questions for Every Role – Veterinarians, Vet Techs, Vet Assistants, Office Managers, and Front Office
1. What are you looking for in a team and an office?
2. What does self-motivation mean to you?
3. What in particular motivates you?
4. How do you organize your day?
5. In a perfect world, how many hours per day and per week would you like to work?
6. How do you deal with conflict in the workplace? Describe a specific situation and how you dealt with it. Would you do anything differently now that you have had time to reflect?
7. How would the previous veterinarian you were employed by describe you if I were to call him/her? What about the other team members, what would they say? Would they say you were on time every day? Easy to get along with? Fun? Great with the patients and the clients?
8. What do you think are your greatest strengths? And what are your greatest challenges?
9. Describe a situation when a client was upset and describe what you did to rectify the situation or help.
10. What are three things you liked most about your last two positions/offices? What are three things you would have changed and why?
11. Describe a great day at the office.
12. What work situations, tasks, or duties cause you stress?
13. Where would you like to see yourself in two years? Where would you like to see yourself in five years?
14. If you weren’t in the veterinary field, what would you be doing? What are you most passionate about?
15. What qualities in a person do you think are important for this position?
16. How would you set the pay scale for this position? What qualifying events or skills would warrant a different pay scale or increase in compensation?
17. What do you think a bonus should be based on?
18. What benefits are most meaningful to you?
19. What have you learned during the pandemic? How did it affect your short and long-term goals?
20. Did you work remotely? Was that easy or difficult for you? How do you feel about being back in an office, working with a team, and having interaction with patients and clients all day?
Additional Questions for Specific Roles
Vet Assistant
1. Have you been involved with placing veterinary supply orders? Explain your process.
2. What have you normally done during downtime?
3. How do you talk with clients about recommended treatment for their pets? Provide an example.
4. What are your most/least favorite procedures?
5. Describe the perfect veterinarian to assist and why?
Office/Practice Manager
1. How would you describe your management style?
2. What are your thoughts about micro-managing?
3. What steps do you take when you realize that you have made a hiring mistake?
4. Do you enjoy being at the front desk or in an office behind the scenes?
5. What do you bring to a team to keep them motivated and smiling?
6. In your previous office did you have full responsibility for the accounts receivable? What was your average production to collection ratio?
7. In your previous office, how would the staff describe you?
Front Office
1. How do you welcome new clients and patients to the practice?
2. What have your past responsibilities been? Which did you enjoy most?
3. How do you talk with clients about treatment costs? Provide an exact example of presenting treatment and negotiating a financial arrangement.
4. How do you describe a perfect schedule and how do you create it?
5. How do you fill any last-minute appointments?
6. Do you enjoy scheduling? What do you enjoy about it?
Veterinarian
1. What does a perfect schedule look like to you?
2. How do you encourage clients to accept treatment for their pets?
3. How do you ask for referrals from existing clients?
4. What do you do at a new patient/client appointment?
5. What types of procedures do you like to do?
6. Are you comfortable being the only veterinarian working in the office?
7. How would your current/past veterinary assistant describe you? How would an owner veterinarian or office manager describe you?
8. What are your goals for each patient and each day?
Overcoming the Mental Hurdles of Owning your own Veterinary Practice
By Perhaps, you are a few years out of school with DVM credentials under your belt. Maybe you have been working as an Associate Vet and your confidence has grown to the point where you’re ready to take the next step with your career – owning your own practice. However, the mindset of this prospect can seem overwhelming and daunting. Most of your schooling has trained you for the practice of medicine, with the bare minimum of business course offerings. You spent more time focused on diagnosing parasites and animal dermatology than on economics classes and how to manage a business.
Perhaps you’ve heard through the grapevine that some of your fellow vets from school have taken the leap and purchased their own practices. Now you’re curious about purchasing your own practice and what your life would look like. But you’re not 100% sure that this is the right move for you. You are confident as a veterinarian, but not so much as a business owner.
Some of the questions that we field when working with potential buyers are the “what if” scenarios. What if the stock market crashes and I’m stuck owning a business that’s now underwater? How can I finance the purchase price of a practice while I still have student debt? What if I wait until I start a family and buy a house first before owning a business? On a good note, maybe the one positive part of living through the pandemic is that it has proven that being a veterinarian is not only an essential service but one that is resilient to major upheaval where other businesses have failed.
Undoubtedly, the financial aspect of owning a business is the biggest obstacle that every business owner faces. A good veterinary transition broker will help you understand the long-term potential of positioning yourself as an owner instead of staying in your current role as an Associate Veterinarian. Brokers are there to guide you through the complexity of purchasing your own practice. They can also act as a consultant on how to build your business and succeed. Our brokers at Omni Practice Group want you to be successful and that continues after the purchase of your practice with consulting services that we offer.
And yes, life will throw things your way that nobody is prepared to deal with. But having a plan in place gives you peace of mind to help you focus on building your business instead of worrying about what the future holds. Nobody wants to reminisce with classmates at a class reunion with regret about what your life could have been like. The should-have, would-have, could-have scenarios tease all of us with decisions that we wish we made earlier in our careers.
If you are ready to take the first step and start the learning process on how to begin your next journey, reach out to one of our experts and we can schedule a one-on-one meeting with you.
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