If you’re considering selling your veterinary practice or merging with another, one question you should be asking is: am I doing everything I can to maximise the value of my practice?
It’s not uncommon for practice owners to unintentionally leave money on the table during a merger or acquisition (M&A).
This article will guide you on how to ensure you get the most out of the deal.
- Understand the True Value of Your Practice
The first step in ensuring you’re not leaving money on the table is understanding the true value of your practice. This isn’t just about financials; it includes the value of your staff, your client base, your reputation, and other intangibles.
Veterinary practices are normally valued based on Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) and a multiplier.
The EBITDA multiplier creates practice value, including goodwill and certain tangible assets, such as property, may increase the selling price further. However, in some cases there may be assets that a purchaser will not be interested in buying which will be excluded from the sale.
If you’re curious about the value of your practice you can use the Rubric valuation tool here.
- Highlight Your Strengths
Make sure potential buyers or merger partners are aware of your practice’s strengths. This could be your loyal customer base, your experienced team, or your state-of-the-art equipment. Highlighting these assets can help you negotiate a better deal.
- Invest in Your Practice
Investing in your practice before an M&A deal can increase its value. This could mean upgrading your facilities and equipment, expanding your range of services, investing in staff training, or streamlining systems. Even small improvements can make a big difference in how a potential buyer views your practice.
- Minimise Your Risks
Every veterinary practice has its risks. These could be outdated equipment, employee turnover, or reliance on a few big clients. Identifying these risks and taking steps to minimise them can increase your practice’s value and make it more attractive to potential buyers.
- Focus on client retention
Provide exceptional service to build strong relationships with your clients. Consider implementing a loyalty program or offering discounts for referrals to encourage repeat business.
- Negotiate Effectively
Effective negotiation is crucial in getting the best deal. Before you begin negotiations, it’s important to understand what potential buyers value most in your practice. For example, some might be interested in your practice because of your unique services, while others may value your location or your skilled staff. Gaining this understanding requires careful research, analysis, and sometimes, direct discussions with potential buyers.
Remember to prioritise your objectives before the negotiation begins. Decide which points you are flexible on and where you need to stand your ground.
- Get Professional Help
Finally, don’t underestimate the value of professional help. M&A advisors offer expertise in structuring deals, understanding market trends, and negotiating terms.
Involving solicitors ensures all legalities and regulations are appropriately addressed, including drafting and negotiating contracts and the deal.
We are experts in supporting the sale of veterinary practices with excellent legal advice. If you have any questions please message our team here.
Financial advisors assess your practice’s financial health, plan tax strategies, and clarify the financial implications of different deal structures.
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