Professional veterinary recruitment

Exit Strategies in the Veterinary Business space!

Are you or is your veterinary practice looking to sell or create an exit strategy in 2024 or in the coming years?

The need for succession planning might arise due to many factors, most commonly is obviously retirement where you would normally reap the benefits of your hard work or if you have plans to expand / maximise the business for sale. Other reasons could be such as ill-health, new business ventures, more time with family members, market conditions or economic circumstances such as recessions, ongoing rising costs, recruitment issues or regulatory changes…

Determine your financial goals and consider factors such as your retirement plans, financial obligations, and desired lifestyle. It takes smart planning and a focus on operational efficiency. Get it right and you should set yourself up for retirement, or the next phase of your life. Exit planning involves creating a comprehensive roadmap for transitioning out of your veterinary practice, ensuring a smooth and successful exit while maximizing the value of your business.

Exit options to consider:

Employee Ownership Trust:

An Employee Ownership Trust (EOT) is where a trust holds a controlling stake of your business. An advantage of an EOT is that you are able to sell for fair market value without facing capital gains tax liability. Preparing your employees for ownership is vital as they will be responsible for earning profit from which you will be paid. The shared ownership of the EOT can motivate an increase in productivity and improve the overall performance of the company.

Management buy-out (MBO):

In a nutshell selling your business to the practices team / management etc. An MBO is a good option to continue the ethos, reputation you have built, and would of course retain all key team members. This can be done either via a VIMBO, which is when a management team initiates a purchase of the business. The second is a BIMBO. A BIMBO is when the existing management team brings in an outside manager or business with skills and/or money to facilitate an acquisition and future growth.

Merger & Acquisition (M&A):

You could look to sell your practice to one of the larger veterinary corporation groups or merge with another independent clinic / group or network. There are many pros and cons to consider for your clients to your team.

Initial Public Offering:

An initial public offering (IPO) is a process in which you offer shares of your private company to the public or a business group. IPO can potentially offer a tax efficient exit and could be extremely profitable process.

Private Equity Investor:

There are a number of private equity investors always looking to enter or expand in the veterinary market.Depending on circumstance this could be the quickest way of selling up if time is not on your side, but you could be unlikely to recoup the full value of the business. That being said with the right buy-in from the management team or network this could be a very profitable option should you stay in the business yourself for a period of time.

There are many other options to consider.

Setting your Exit Goals – Ask yourself:

• 1.Do you want to sell to a group or local veterinary competitor?
• 2.Would you consider selling to an associated veterinary investor?
• 3.Does your veterinary business have the capacity for further growth?
• 4.Are you looking for your management team to take over your business?
• 5.Who would have an interest in buying your company?
• 6.Do you want to exit completely?
• 7.Do you want your business to continue to thrive after your exit?
• 8.Is your business ready for sale?

Having an exit strategy in place will help you communicate your plans to your stakeholders, partners, clients, staff and will help to influence your exit strategy. Set realistic, achievable goals that can be aligned to your exit strategy.

Everyone wants to maximize the value of their business, why wouldn't you especially in the current veterinary consolidation high (even with the dropping slightly). With this in mind take proactive steps to include improvements within your veterinary / management team, equipment / technology, streamline operational efficiency, reputation, brand, market position, premises sustainable revenue (is a big subject right now), client base / services offered, and consider tax and legal consequences etc.

Steps to consider:

Perhaps you could look to sell your practice to an external individual vet/vets. This may be one of the more preferable solutions for owners who care the most about the cultural values of the practice being retained after the sale.

• 1.PLAN, PLAN, PLAN. The key is to start planning well in advance before you decide to sell your vet practice / clinic / Hospital so when the time comes, you will already have everything lined up.
• 2.Set up an effective team management structure which will help you. Invest in training (still a huge issue in the veterinary market).
• 3.If you own the buildings, it's obvious but make sure that all repairs are done and the premises look well maintained. The condition of the building can make or break a sale! If rented / leased then obtain the paperwork, terms and conditions, renewal of the lease etc.
• 4.Technology – Is the business up to date with modern tech / equipment or it this something that a potential buyer will have to consider looking into (hassle, training, cost etc)?. Is your online presence the best it can be? Update your website and social media profiles and make sure the site/profile reflect the practice's current status and that it's easy to find information, hours of operation and services offered.
• 5.We see that most veterinary practices are set up through a limited company or a partnership LLP which are two very different legal entities, so you need to look into the logics, legalities, tax considerations, partners if any and terms of both.
• 6.Build a prospectus of the business, from the staff, to accounts, to the client base etc.
• 7.Gather essential documents and information. Documents are vital when selling any business. These would give your potential buyer the impression that you have been running a tight ship.
• 8.Profit and Loss Statement (P&L) of your Veterinary practice for three years and tax returns also show how much tax you paid on that profit, which can affect how much you net after taxes each year.
• 9.Equipment and stock inventory – what's owned what's leased etc.

Factors that could potentially impact or increase practice values:

• 1.Location: Working in the recruitment fields here at Vet Seekers, location and demographics are key for existing and new practices and is one of the practice largest assets.
• 2.Size and room to expand: You would normally find that the larger the veterinary practice affects its overall value as they generally bring in more revenue per employee, have a larger client base, offer more services / specialisms, diagnostic equipment etc as opposed to a smaller one theatre, 2 vet practice. That being said if there is scope to expand further then this would be a USP which would increase value.
• 3.The Team: Let's face it, the majority of UK practices are understaffed. A well-staffed veterinary practice/clinic/hospital with a trained management team, experienced staff members, good retention, strong reputation in the right area will of course add value.
• 4.Specialists / Other Services: Having qualified specialists such as medicine, surgical, orthopaedic, imaging, exotic vets and certificate holding nurses in your team will of course add value. OOH services are great for client and patient care but can be costly.
• 5.Technology: modern tech / equipment is key for growth and overall value. It frees up time, automates processes, enables veterinary teams to better manage appointments, patient records, and finances while providing excellent care for pets.
• 6.Online presence: Having a up to date user friendly informative website is a must now a days, this is the face of your business online. So are your social media profiles which reflect the practice's current status, hours of operation and services offered. It also reflects your reputation – Google, Facebook reviews etc.
• 7.Timing of the sales process: If you are planning to sell your vet clinic soon, you will have no choice but to accept the best available offer. But if you are willing to wait a little while, more potential buyers will come forward, and you will be able to negotiate better terms.
• 8.Pre-planned strategy: Having your exit strategy mapped out to reflect your exit criteria. Fail to plan, plan to fail…
• 9.Your clients: Location is a factor with this as well as insured / none insured clients. Having pleasant loyal clients, who bring in repeat business and refer others, far out ways higher numbers of the opposite.

If you are looking to exit and would like a confidential conversation, please reach out to David Maclellan MD at Vet Seekers who has a network of professionals at hand to assist along with investors, buyers and veterinary professionals ready and waiting.

T:0333 014 7374
E:david@vetseekers.co.uk