3 Reasons to Sell your Practice While the Tides are High
Timing is everything. If you would have invested $1,000 in Nike stock at its initial public offering in 1980, your investment would be worth over $190,000 today. The same can be said for many other stocks or investments. You see, the tides of the economy ebb and flow. But how does that relate to your veterinary practice?
We have been experiencing a perfect storm of sorts over the past several years. The economy has been doing well, interest rates are at all-time lows, buyers are plentiful with both corporate and individual buyers and capital gains and income tax rates are relatively stable. We’ve been on the “flow” end of ebbing and flowing with practice values at an all-time high. But when do the tides start to recede?
We can’t predict the future. But there are several things we know with relative certainty. Corporates have been paying incredible prices for practices. How long will this last? According to an article in Entrepreneur magazine, corporates expect to own 25% of all veterinary practices by 2023. After that, they will slow down their purchasing of practices as fewer practices will generate enough revenue to peak their interest. Practice values will in turn go down.
We also know with a high level of certainty that both capital gains and income tax will be going up. President Joe Biden explicitly stated this during his campaign and is currently proposing this as we speak. This will affect practice sales as it’s not uncommon for a practice purchased by a corporate to sell for $2 million and higher. The proposed capital gains will be on amounts over $1 million. This will reduce the amount of funds that you take home after taxes. It could be by as much as 20% or more.
As I stated, we can’t predict the future, but we do know the present. If you are even considering selling your practice in the next 3 years, we believe it would be well worth a phone call to us for a free consultation. Selling in 2021 instead of waiting a year or two could earn you a significant amount of extra money. The cost of a phone call = $0. The cost of waiting = potentially $100,000+.
Call us at 877-866-6053 or email info@omni-pg.com.
PS: If you have an offer from a corporate, call us anyways. We’ve helped a number of veterinarians get a much higher offer than their initial corporate offer.
Read MoreWhen You Should Think About Selling Your Practice
There are many reasons why veterinary practices are put up for sale. Some of the more common reasons actually have little to do with the practice’s general performance. For example, many veterinarians discover that they need to sell for health reasons or personal concerns, such as divorce or partnership issues. While a business downturn might prompt many veterinarians to sell, economic drivers are not the only issue. Owners may want and need to sell, but often it isn’t always that simple.
Many veterinarians are looking to retire but are unpleasantly surprised to learn that they simply can’t afford to do so. Still yet, many veterinarians don’t truly want to retire or sell, but instead, they just want more freedom in their lives. The day-to-day responsibilities of owning and operating a practice can take their toll. Many veterinarians are looking to make a change and would love to be free of this burden. This class of owner has already “checked out” mentally, and this can have profound negative consequences for their businesses.
When a veterinarian wants out but discovers that he or she simply can’t afford to sell or retire, it will come as no surprise that there is usually an accompanying drop off in enthusiasm. Ultimately, the vast majority of practice owners will start to lose focus. Often, we find that they stop investing the capital necessary to continue the growth of the business, which can trigger other events, such as the loss of key staff members and/or customers. The failure of the practice to maintain its footing and competitive advantage can lead to a more aggressive posture by existing competitors or even encourage a new competitor to move into the market.
In time, the practice owner may come face-to-face with the harsh realization that they have no choice but to sell if they are to salvage any of the practice’s value. The best way for a practice owner to safeguard against this situation is to sell when his or her practice is doing well, as this helps to ensure an optimal price.
Working with a practice broker, even years before one is interested in selling, is one of the single smartest moves any business owner can make. The time to think about selling your practice is now, as no veterinarian knows what life or the market will bring.
To help figure out where to start, contact us today – phone: 877-866-6053 or email: info@omni-pg.com.
Read MoreSelling Real Estate with Your Dental Practice
Megan Urban, Transition Advisor at Omni Practice Group, gives some advice for anyone who is unsure if they should sell their real estate along with their dental practice.
Read MoreWhen You Should Think About Selling Your Practice
There are many reasons why dental practices are put up for sale. Some of the more common reasons actually have little to do with the practice’s general performance. For example, many practice owners discover that they need to sell for health reasons or personal concerns, such as divorce or partnership issues. While a business downturn might prompt many dentists to sell, economic drivers are not the only issue. Owners may want and need to sell, but often it isn’t always that simple.
Many dentists are looking to retire but are unpleasantly surprised to learn that they simply can’t afford to do so. Still yet, many dentists don’t truly want to retire or sell, but instead, they just want more freedom in their lives. The day-to-day responsibilities of owning and operating a practice can take their toll. Many dentists are looking to make a change and would love to be free of this burden. This class of owner has already “checked out” mentally, and this can have profound negative consequences for their businesses.
When a dentist wants out but discovers that he or she simply can’t afford to sell or retire, it will come as no surprise that there is usually an accompanying drop off in enthusiasm. Ultimately, the vast majority of practice owners will start to lose focus. Often, we find that they stop investing the capital necessary to continue the growth of the business, which can trigger other events, such as the loss of key staff members and/or customers. The failure of the practice to maintain its footing and competitive advantage can lead to a more aggressive posture by existing competitors or even encourage a new competitor to move into the market.
In time, the practice owner may come face-to-face with the harsh realization that they have no choice but to sell if they are to salvage any of the practice’s value. The best way for a practice owner to safeguard against this situation is to sell when his or her practice is doing well, as this helps to ensure an optimal price.
Working with a practice broker, even years before one is interested in selling, is one of the single smartest moves any business owner can make. The time to think about selling your practice is now, as no dentist knows what life or the market will bring.
To help figure out where to start, register for one of our upcoming webinars or contact us today – phone: 877-866-6053 or email: info@omni-pg.com.
Read MoreWhat You Need to Know Before Signing a Covenant Not to Compete
You’ve graduated from veterinary school so naturally, you’re ready to get your feet wet and start practicing. Nearly every veterinarian will be an associate at the beginning of their career and with that comes the dreaded associate contract. You found a great associate opportunity and you’re eager to start collecting paychecks. But before signing that contract, particularly the noncompete clause, be aware of the details that could prevent your opportunity to start your own practice in the areas/neighborhoods you desire.
A covenant not to compete, otherwise known as a non-compete agreement, or restrictive covenant, is a clause in the contract that prohibits the restricted party from engaging in services similar to those of a non-restricted party. Non-compete agreements may restrict a veterinarian’s actions by time, location, and clients.
Here are some valuable tips before signing a non-compete agreement for veterinarians who plan on owning their own practice in the near future.
Be sure you understand every detail: Associate contracts are designed to protect the owner more so than the associate. OMNI Practice Group highly recommends you have an attorney who specializes in veterinary Associates contracts review all legal documents before signing. If you don’t already have an attorney, we will be more than happy to recommend one.
Advocate for the minimal non-compete radius: A standard non-compete radius should be between 3 to 5 miles. Keep in mind the radius is “as the crow flies.” In more rural areas, we have seen up to 15 to 20 miles, but of course try to negotiate for less, especially if you plan to stay in the area.
The shorter the better: We’ve seen unfavorable terms of up to five years. Typically, your non-compete clause should only be enforceable for 1 to 2 years. Try to negotiate to a shorter period, that will work in your favor when you’re ready to own your own practice.
Be sure your non-compete only covers the location in which you are employed: If your employer owns multiple locations, but you’re only seeing patients at one specific office, make sure your non-compete only applies to that location.
Notice of resignation: Keep in mind that when you’ve found the ideal practice to purchase or if you decide to do a start-up, the process can move rather quickly. We’ve seen contracts that require the associate to give up to 6 months’ notice before leaving their position – a fair amount of notice is typically 30 days. Be sure to negotiate the least amount.
My rule of thumb when it comes to associate contracts is “Less is Best” …well, with the exception of wages!
When you’re ready to purchase a practice or just want to discuss the process in preparation please feel free to give us a call at 877-866-6053 for a free, no-obligation consultation. We’re here to help you!
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