Whether you are a large multi-state owner of a vet franchise or the owner of a very small practice in the neighborhood you were born in, maybe selling your vet practice can be the single smartest choice to do right now.
But as you probably like to make informed and fact-based decisions, some questions automatically arise: what’s the trick to selling a veterinary practice? How exactly can you sell your practice? What should be your exit strategy?
There is no magic trick, as in almost anything. But there are some keys that we must respect if we want to sell or buy a veterinary clinic. Let’s take a look at them:
Everyone has to win: our aim is general gains
When a client calls us and says, I want to sell my clinic, how much is it worth? A key question; but a difficult one, it requires a specialized external study by specialized consultants. Without a coherent valuation, we will not know what we have in our hands.
Of course, it requires honesty. In other words, numbers are tell-tale signs, for better or worse. You should provide the consultant with all the documentation he asks for to make the veterinary practice acquisition process as smooth as possible.
The buyers are more than often well informed. It is not worth what the management software says, what is worth is what is stated in the profit and loss account and in the balance sheet, and the cash flow statement. And that is what would eventually affect the ultimate veterinary practice appraisal and subsequent selling agreement.
Always look for the pros
The data of the management program allow us to evaluate aspects such as the number of active clients, or the quality of the income, but if the program shows more income than that declared to the tax authorities, we have a problem.
This is because everything that does not appear in the balance sheet and above all in the profit and loss account, does not exist. And besides, this type of deviation generates a lot of mistrust. The clearer everything is, the better.
Many people talk about effort, time invested, etc., etc., etc. These are neither financial nor accounting variables, and certainly, no buyer is going to value the performance or profitability of a clinic because the previous owner has had a hard time getting it off the ground. And this kind of information can only be gathered by experts.
EBITDA: the very core of your decision
EBITDA, this word, which is an acronym, is becoming more and more common. This acronym stands for EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, and AMORTIZATION. Or what is the same, the money actually earned in the business. Fundamentally, the more is the better.
This figure is at the end of the profit and loss account, and if it is low and is not fiscally and legally reduced on purpose for some reason, it means that the investment will not recover the investment in the form of profit.
This could change perhaps in the form of salary, but if so, we must justify it in the analysis of the valuation of the clinic that the consultant makes us. In addition, a good EBITDA will give confidence to the investor.
If you need additional information, please reach out to us directly by calling 617-987-4910 or visiting our website. Our team will be waiting for you and ready to help you make the best out of this heartwarming business.