BUYING A VETERINARY PRACTICE IS A BIG DECISION, probably one of the most important you will make, so it’s important you get the right advice at the very start of your journey towards practice ownership.
- A is for… ALWAYS work with an independent business adviser with access to all the banks. The lenders all have different lending criteria, and will rarely offer you the best terms at the outset; it’s amazing what a bit of competition can do to ensure you secure competitive lending terms.
- B is for… BUSINESS PLAN. This is essential to demonstrate experience, competence and affordability.
- C is for… CASHFLOW. As the saying goes, “Turnover is vanity, profit is sanity but cash is reality.” It is vital you prepare a cashflow forecast to confirm the viability of your purchase and to highlight any potential peaks and troughs in your cash balance to ensure suitable provision can be made.
- D is for… DELEGATE. Do not try to do it all yourself. You are the best when it comes to all things “clinical”, but you are not expected to be the best in all other aspects of practice purchase, so surround yourself with experts who have been there before and can guide you accordingly.
- E is for… EQUIPMENT. Be it existing equipment at the practice you are acquiring or new equipment you are seeking to purchase post-purchase, securing flexible, competitive and taxefficient funding terms is essential.
- F is for… FINANCE. An essential requirement for most practice purchases. Thankfully the veterinary profession is viewed as very much a green light sector, but bear in mind that the banks are all very different in their lending stance and criteria so it is vital to engage an independent expert to work with you on your purchase who offers a whole-of-market overview rather than the view of just one lender.
- G is for… GOODWILL. In most cases, this is the largest component of any veterinary practice purchase and is effectively the sum paid to acquire the business over and above any property and equipment element. Most high street banks and smaller lenders understand and “should” lend against goodwill – subject to their own individual lending criteria. They are all different though, so do work with an independent adviser for a whole-of market overview.
- H is for… HELP. Do not be afraid to ask for help. You are not expected to know everything. Engage with the experts in the field who will almost certainly have come across the same issue previously and can guide you in the right direction.
- I is for… INDEPENDENT. Many first-time buyers make the mistake of only approaching their current bank and not seeking other opinions. By engaging an independent business adviser, you will have the comfort of knowing that all the main banks have been considered and a degree of competition will ensure both flexible and competitive terms.
- J is for… JUSTIFY THE PURCHASE. Not all practices are worth the asking price and you need to work out if you will be financially better off post-purchase. The preparation of a profit/loss forecast based on you as the owner is a good starting point to answer the “is it worth it?” question.
- K is for… KNOWLEDGE. Practice purchase is a minefield and could be costly if you get it wrong. Ensure you work with specialist lawyers, accountants and business advisers who will keep you on the straight and narrow and should save you money in the long run.
- L is for… LAWYERS. Always work with a solicitor who has prior experience in the veterinary market – it is a false economy to use a small local firm with no such experience. You might also want to consider asking for a fixed fee or if they will consider a zero-abort fee so if the purchase does not complete, they will not charge you.
- M is for… MANPOWER. Most new practice owners find that staff are their biggest headache postpurchase. New contracts will almost certainly be needed for any selfemployed staff and if any changes are proposed to salaried staff, ensure you engage with an employment law specialist – especially one who has experience in the veterinary area. It is also worth having a reliable veterinary specialist recruitment agency on speeddial for those Monday mornings when a member of your team has called in sick and you have a full book to deliver!
- To be continued…
