Results of Benchmarks 2010: A Study of Well-Managed PracticesSM by Wutchiett Tumblin and Associates and Veterinary Economics reveal that a current partner, or a current or future associate
is the most likely buyer in 69 percent of practices. And, one of the most important steps to take to prepare an associate
for ownership is teaching them about and involving them in the business side of practice.
Do you have your exit strategy mapped out? Do you plan to sell a part interest to an associate, continue to practice for
a few years, and then sell your remaining share of the practice? Do you have your practice valued every 2 to 3 years as part
of your planning process until you're ready to sell, and then plan to present the most recent valuation report to your associate
and ask for an answer in two to three weeks?
Unfortunately, the above strategy doesn't do much to prepare your associate for a buy-in. You haven't considered where the
associate is in his or her thinking. And sometimes because of a lack of knowledge, training, and preparation for ownership,
the associate is overwhelmed and backs off. If this sounds familiar, read on.
The sale of an interest in a veterinary practice is not an event; it is a process that starts 4, 5, even 10 years before the
sale. The timeframe depends on the readiness of the practice and the people involved. For example:
• Moving into a tax structure that minimizes your tax on the sale proceeds may require 10-year advance planning. The
benefits of planning can mean hundreds of thousands of dollars of tax savings.
• Timing the sale to catch the peaks in value as the practice goes through its growth phases. Even 12 months can make
a sizeable difference in the selling price.
• Preparing an associate for the financial responsibilities of ownership takes 5 or 6 years and is a critical part of
the process, particularly if you are financing the purchase.
How do you prepare an associate for ownership? Let's look at the steps Dr. Steve Bailey and Dr. Meg Jones took to assure
Meg would be ready for ownership.
Meg joined Steve's companion animal practice in Maryland two years ago. She brought five years of medical experience, a special
interest in feline and senior wellness, and a desire to become a practice owner. Meg and the practice proved to be an excellent
match. Now, she and Steve are ready to begin her transition into a management role with the intention of a 30 percent buy-in
in the year 2013.
Steve knew developing a plan for the buy-in would give Meg time to get used to the idea of ownership, provide an opportunity
for her to learn about management, and assure the buy-in would be a positive, successful experience for both. With Meg's
input, Steve created the following four-year action plan.