6 Things You Have NOT Considered with the Sale of Your Veterinary Practice

by | Sep 6, 2020

1. Your Practice Manager (Hospital Manager or Hospital Administrator) will become your new boss after closing. 

  • In some cases, this will literally be the case, and in other cases, it may be just figuratively.
  • This is actually a good thing.

2. Valuation multiples (more commonly known as EBITDA multiples) do not matter.

  • 9x valuation multiple can be far better than a 10x offer from a different buyer.
  • Similarly, would you be able to tell when a 10x offer should really be a 12x offer?

3. If you are going by what your best friend told you when they sold their veterinary practice, you are setting yourself up for failure.

  • Never settle for one offer.
  • Never settle for the first offer.

4. Differences in corporate consolidators beyond the obvious.

  • 16 page LOI versus a 1.5 page LOI.
  • A corporate consolidator that requires 3 different follow-ups versus a consolidator who only needs 1 follow-up to get to the same place.

5. If 35 corporate consolidators completed a Purchase Price Allocation (PPA) on your hospital, you will get 35 unique PPAs.

  • This matters because after closing, you will have to file tax form 8594 and your tax liability will be based on your PPA.
  • How much of the Purchase Price should be taxed at capital gains rate versus ordinary income? Do you know?

6. This is probably obvious, but important enough to reiterate…the less time you give yourself for making a deal, the less options you are giving yourself.

  • Based on a recent example, Start to Finish takes 8 months.
  • In my opinion, this is not a pandemic 8 months, but rather a typical deal time-frame.

I hope this is helpful.