In my experience, sellers get concerned with the “correct” time to tell their team about the transition. We recommend informing them when all documents or some are signed and there is no doubt the sale will go through. It may be 2 weeks or 2 days before closing, it depends, and your transition advisor will assist you.
If you tell your team too early, they may become stressed, confused, and unsure of their future, so they may panic and find another job and possibly tell clients or other veterinarians. None of this is good! Your team and clients are important to the goodwill of your practice.
When you do announce the new buyer, remind the team that they love their teammates and patients and that isn’t changing. Explain a bit about the new veterinarian and schedule time for them to meet. Help them feel confident that the transition will be great, and the new veterinarian will need their assistance for everyone to be successful. If you are going to continue to work for a period of time in the practice, let them know that and say, “I’ll be here to assist in the transition to make sure it goes smoothly”.
A letter to clients is typically sent from the seller with the buyer’s approval. Depending on both the buyer and seller and the unique area, a newspaper ad can be placed, and an open house can be scheduled. The letter should emphasize your appreciation of serving them as their veterinarian over the years and also tell clients how happy you are that you found a great veterinarian, or group if it’s a corporate buyer, to take as good of care of the clients and patients as you did. Your transition advisor will provide ideas and examples to help you choose the best method for announcing the transition.
Clients may be unsure of the new buyer, so if you are in the office “brag” him or her up a bit. Post the letter at the front desk and have copies on tables so the clients can read about the new buyer while they wait. It’s important that the buyer of your practice not make any large changes in the practice and mirror you and your philosophy as much as possible. This will help make the transition seamless.
The new team will be concerned about the new buyer’s expectations so consider not changing much in the practice for a while, so they have a chance to transition and become comfortable. Provide information they won’t know such as how to schedule and what instruments you need for each procedure. Help everyone to be successful in their position.
Remember to remind your team often that everything is ok. Consider having one-on-one meetings with each new team member and ask specific questions. “What keeps you coming here every day? What’s one thing you would change in the practice if you could? Can I count on you to bring questions and concerns to me rather than involve the entire team?”
Transitions can be stressful. Work with your transition advisor that has many experiences and ideas to share to help everyone be successful.Read More
You shouldn’t expect to sell your practice overnight. For every practice that sells quickly, there are a hundred that take many months or even years to sell. Having the correct mindset and understanding of what you must do ahead of time to prepare for the sale of your practice will help you avoid a range of headaches and dramatically increase your overall chances of success.
First, and arguably most importantly, you must have the right frame of mind. Flexibility is a key attribute for any veterinarian looking to sell his or her practice. There are many variables involved in selling a practice and that means much can go wrong. An inflexible owner can even irritate prospective buyers and inadvertently sabotage what could have otherwise been a workable deal.
Be Flexible on Price
A key part of being flexible is to be ready and willing to accept a lower price. There are many reasons why practice owners may fail to achieve the price they want for their practice. These factors range from lack of management depth and lack of geographical distribution to an overreliance on a handful of customers or key clients. Of course, one way to address this problem is to work with a practice broker in advance, so that such price issues are minimized or eliminated altogether.
Be Prepared to Compromise
In the process of selling your practice, you may want to achieve confidentiality and sell your practice quickly and for the price you want. However, the fact is that most sellers find that it is possible to have confidentiality, speed, and the price you want, but not all three. Ultimately, you’ll have to pick two of the three variables that are most important to you.
A third way in which practice owner flexibility can boost the chances of success is to embrace the virtue of patience. By accepting the fact that practices can “sit on the shelf” for a considerable period of time, you are shifting your expectations. This realization can help reduce your stress level. The fact is that stressed-out owners are far more likely to make mistakes.
Sometimes Losing is Really Winning
A fourth way in which practice owners should be flexible is realizing that you and your lawyer will not win every single fight. There will be many points of contention, and a smart deal maker realizes that it is often better to have a good deal than a perfect deal. You may have to make sacrifices in order to sell your practice. Simply stated, you shouldn’t expect the other side to lose every point.
At the end of the day, a savvy practice owner is one that never loses sight of the final goal. Your goal is to sell your practice. Seeing the situation from the buyer’s perspective will help you make better decisions on how you present your practice and interact with prospective buyers. Maintaining a flexible attitude with prospective buyers helps to position you as a reasonable person who wants to make a deal. Goodwill can go a long way when obstacles do arise.Read More
A recent and insightful Forbes article, “Study Shows Why Many Business Owners Can’t Sell When They Want To” penned by Mary Ellen Biery, generates some thought-provoking ideas. The article discusses an Exit Planning Institute (EPI) study that outlined the reality that many business owners can’t control when they are able to sell. Many business owners expect to be able to sell whenever they like. However, the reality, as outlined by the EPI study, revealed that the truth is that for business owners, selling is often easier said than done.
In the article, Christopher Snider, President and CEO of EPI, noted that a large percentage of business owners have no exit planning in place. This fact is made all the more striking by the revelation that most owners have up to 90% of their assets tied up in their businesses. Snider’s view is that most business owners will have to sell within the next 10 to 15 years, and yet, are unprepared to do so. According to the EPI only 20% to 30% of businesses that go on the market will actually sell. Snider believes that at the heart of the problem is there are not enough good businesses available for sell. In short, the problem is one of quality.
As of 2016, Baby Boomer business owners, who were expected to begin selling in record numbers, are waiting to sell. As Snider stated in Biery’s Fortune article, “Baby Boomers don’t really want to leave their businesses, and they’re not going to move the business until they have to, which is probably when they are in their early 70s.”
The EPI survey of 200+ San Diego business owners found that 53% had given little or no attention to their transition plan, 88% had no written transition to transition to the next owner, and a whopping 80% had never even sought professional advice regarding their transition. Further, a mere 58% currently had handled any form of estate planning.
Adding to the concern was the fact that most surveyed business owners don’t know the value of their business. Summed up another way, a large percentage of the business owners who will be selling their businesses are Baby Boomers who plan on holding onto their businesses until they are older. They have not charted out an exit strategy or transition plan and have no tangible idea as to the true worth of their respective businesses.
In Snider’s view, the survey indicates that many business owners are not “maximizing the transferable value of their business,” and added that they are not “in a position to transfer successfully so that they can harvest the wealth locked in their business.”
All practice owners should be thinking about the day when they will have to sell their practice. Now is the time to begin working with a broker to formulate your strategy so as to maximize your business’s value.Read More
We see embezzlement in the veterinary office all too often. The average embezzlement amount REPORTED is over $100,000 in a veterinary practice, and we know most is not reported or ever discovered. Please review the following tips to avoid embezzlement, as well as signs from employees to be aware of.
-Limit access to practice management software to make adjustments, and format software to disallow deletions or changes after the close of each month. Assign passwords to each employee. Ensure the software company understands that you are the only person that can make changes to the software.
-Clearly set expectations and protocol for making adjustments.
-Review daily reports for adjustments, provider production (ensure there are no “zero” charges), collections, over-the-counter collections, and audit/deletion. Ask questions and research as appropriate.
-Review and confirm the accuracy of daily reconciliation of deposit, petty cash, and cash drawer. Confirm monthly bank reconciliations.
-Review accounts receivable aging reports each month and research any accounts as appropriate.
-Do not allow team members to purchase things for the office and be reimbursed.
-Match up all accounts payable checks with statements and confirm accuracy. Watch for vendors or names you don’t recognize or come up frequently.
-Confirm all bills and credit card statements are accurate.
-Never sign a blank check for a team member, client, or vendor.
-Ensure checks are in numeric order and keep all voided checks.
-Look for trends, such as missing checks, incorrect deposits, missing charts, increased adjustments, and patient complaints.
-Review the details of each team member’s paycheck and year-to-date numbers.
-Perform background checks according to state law.
-Have your veterinary-focused CPA involved with your bookkeeping
-Implement a comprehensive written Office Policy and Employee Manual
Potential Employee Warning Signs
- Resistance to change or having your veterinary CPA or consultant view additional practice information
- Collections have slowed with no justified reason
- Daily deposit reconciliation is not being done timely or is inaccurate
- Adjustments increase with no justified reason
- Team member refuses to take a vacation, wants to take work home, has a financial crisis, and/or resents your income and lifestyle
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.