Key Takeaways
- Choosing the right buyer involves more than finding the highest offer. The buyer should also align with your goals for your team, culture, standard of care, and the future of the practice.
- Practice partners should agree on their goals, preferred deal structure, and expectations before going to market.
- An M&A attorney with veterinary industry experience can help protect your interests without creating unnecessary obstacles during the transaction.
- Significant compensation, staffing, or operational changes during the sale process can affect adjusted EBITDA and potentially complicate the deal.
- A smoother sale starts with preparation, including understanding your practice’s value and knowing what you want from the transaction.
Selling a veterinary practice is a major transaction, and even a strong deal can become unnecessarily stressful when the right pieces aren’t in place before the process begins.
In this episode of 360 Half Seconds, Kia and Matt discuss some of the biggest factors that can make the difference between a relatively smooth practice sale and one filled with delays, disagreements, and surprises.
Start With the Right Buyer
According to Matt, one of the most important factors is also one sellers may underestimate: buyer selection.
Not all veterinary practice buyers operate the same way. Their deal structures, expectations, cultures, and approaches to acquired practices can vary considerably. Those differences can also change over time, which is why relying solely on another veterinarian’s experience with a buyer six or nine months ago may not give you an accurate picture of what working with that buyer will look like today.
Choosing the right buyer also requires knowing what you want from the sale. Getting a strong financial return is important, but it may not be your only priority. You may care about preserving the practice’s culture and standard of care, protecting your staff, keeping the practice name, or limiting how much changes after the transaction. A buyer who is a great fit for an owner who welcomes operational changes may be completely wrong for an owner who wants the practice to continue running largely as it does today.
That’s why the highest offer isn’t automatically the best deal. The right buyer needs to fit both your financial goals and the priorities that matter to you after closing.
Make Sure Everyone Is Aligned
Preparation matters too, particularly when a practice has multiple owners. Before going to market, partners should be aligned on whether they’re truly ready to sell, what type of transaction they’re willing to consider, and how they expect the deal and proceeds to be structured. Unresolved disagreements become much harder to work through once a transaction is underway.
The same principle applies to the professional team helping with the transaction. Matt recommends working with an M&A attorney who has veterinary industry experience. Someone familiar with veterinary transactions is more likely to understand what is customary, recognize legitimate concerns, and protect the seller without creating unnecessary obstacles to getting the deal done. (You can listen to Matt and Kia discuss choosing the right attorney in more detail here.)
Don’t Create Surprises During the Sale
One of Matt’s less obvious warnings involves what owners do after deciding to sell. The process from going to market through closing can take roughly 90 to 150 days. During that period, owners may decide to give overdue raises, change staffing, or make other financial decisions. Those may be reasonable business decisions under normal circumstances, but once a valuation has been established and due diligence is underway, changes that affect adjusted EBITDA can also affect the economics of the deal.
The better approach is to address compensation and other operational issues consistently as part of running the practice, rather than trying to catch up immediately before or during a sale.
Preparation Can Take Stress Out of the Process
There are dozens of details that can affect a veterinary practice transaction, but many of the biggest problems can be reduced by doing the work before the sale begins: know what you want, understand your practice’s value, choose a buyer that fits your goals, get owners aligned, assemble the right advisors, and keep the business running consistently throughout the process.
Watch the latest 360 Half Seconds video to hear Kia and Matt explain what can make a veterinary practice sale smoother and where sellers can unintentionally create complications.
Thinking about selling but not sure where you stand? 360 Vet Sales offers complimentary practice valuations to help veterinary practice owners understand what their business may be worth and make more informed decisions about their exit plans.