Practice Transtions

By Corey Young, MBA, CEPA, CVA, ABI

​Congratulations, you just accepted an offer on your practice! With all the emotions associated with the transition, when to notify your staff is surely at the top of your “to-do” list.  Telling employees that you are selling your practice is an extremely delicate process. Breaking the news too early can come with many risks, so best to wait until all final closing documents are signed by both parties and no more than one week before the new owner takes over.
So, what are some potential risks?
One of the primary risks is that employees will naturally be worried about their job security the moment you make your announcement. Oftentimes if they have too much of an advanced notice they may start searching for other opportunities. Staff leaving could negatively impact the transition and patient experience because of how instrumental they can be in helping the buyer and the patients adjust to new ownership.
The other major risk is that nothing is final until its final. Veterinary practice sales are extremely complex and can be delayed for a multitude of reasons or fall through completely. Making the announcement before the sale is complete will cause stress and heartache amongst your staff during a time that you will be preoccupied with navigating a significant professional milestone. If the staff were to find out before closing was final, you wouldn’t be able to offer any reassuring answers because of unforeseen changes to the closing timeline.
Finally, regardless of your views of your staff’s maturity level, gossip will ensue. I have seen it countless times where a veterinarian tries to provide honest reasons on why they are selling, only to have their words misconstrued. Comments such as, “I’m selling my practice to focus on my health” can quickly morph into, “S/he is selling because the practice is going under,” or lead to unfounded conclusions such as, “After the new guy starts, we will all be replaced.” This kind of fear and uncertainty will have a profound impact on staff morale during a time where they will be needed to ensure a great patient experience during the transition process.
In the end, you probably have a deep and meaningful relationship with your staff. They deserve to know about ownership changes as they will be impacted, but it is best for them (and for you) that they be kept out of the loop until you have concrete answers to provide them.

If any of the following sounds even slightly familiar, raise your hand:
I was ready personally, and my practice was ready in August 2019. I choose to wait because (pick one or more):

• I have a kid with one year left in college
• I have one year until I can draw Medicare
• There is one more room in the house I would like to finish
• My spouse retires in a year
• I pay off my house in a year
• I turn (insert round number like 60 or 70) next year and I would like to wait until then
• Etc.…

Now, for those of you that raised your hand, consider the reality of August 2020. How does that August 2019 decision to wait look? Questionable at best.

My intent is not to beat up on those of you that this struck a chord. Rather, I want to emphasize the need for starting early and getting help.
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Transitioning is a difficult process. Do not go it alone. Contact an experienced, qualified transition specialist and get the ball rolling. We are here to help.

Partnership
Selling a portion of your practice via a partnership has its own pros and cons.  One of the pros is that if you can find a partner with similar interests and philosophies as well as a set of skills that enhances your practice and you get along well, you’ve found a winner.  The cons are that those types are difficult to find.  The ADA states that 70% of partnerships fail.  However, if done right using experts in partnerships, you can have a successful and happy partnership transition.

Walk Away Sale
A walk away sale involves the seller removing themselves and their business interests from the practice the moment the sale is completed. This could be ideal for those in the process of retiring or relocating to a new area across the country. But sellers must analyze whether they truly want to walk away from the business they helped create. To complete a walk away sale effectively, sellers must tie up all loose ends many weeks before the buyer completes their transaction. This ensures a seamless handover process and allows the buyer to immediately enter the business with a fresh start.

Sell and Work Back
This can often be very gratifying.  The seller sells 100% of the practice but stays to work as an employee in the practice.  The seller may cut back their hours or may keep up the pace.  The seller and buyer work together, and the seller may even mentor the buyer.  The seller no longer has any management responsibility or ownership.  He simply does clinical veterinary medicine.  As long as the two get along, this can work wonders.

Customized Transition
Working with a Veterinary practice transaction broker can help sellers customize the sale according to their unique requirements. Brokers are experts in managing the transition process, from organizing the timing of asset sales to implementing buy back procedures once the sale has been completed. It’s important the company the seller works with has a full understanding of their business plans before they begin the transition process, as this will help reduce potential issues as the transaction is completed.

By having a clear understanding of the available Veterinary practice transition options, owners can ensure the right model is found for their sale process. To learn more, contact us today!

info@omnipg-vet.com
877-866-6053