Every veterinary practice owner needs to know two important things about his or her business – where the exit door is and how to open it.
Unfortunately, many owners don’t know the answers to these questions, for a number of (understandable) reasons.
Perhaps the most common hurdle is: “I am too busy trying to run the practice and do my day job to think about that.”
As with any excuse based on not enough time, the issue is one of priorities – it is often not sufficiently high up on the agenda. The danger is when it becomes high up on the priority list, it might be too late to realise the value in the business.
For many business owners, the second hurdle is they simply don’t know their practice’s potential buyer. This, however, is not something that can really be said about the veterinary industry just now.
For some time, the industry has seen significant consolidation as large corporate practices actively look to acquire firms across the country and, as a result, valuations have been rising. Therefore, for many veterinary practice owners, the question can be whether to sell the practice to younger vets in the practice or one of the larger corporates. This question can be a very difficult one, but one owners need to deal with.
In some cases, the answer will be driven by which route allows the owners to maximise the value for their business. However, in many other cases, maximising value is not the key driver, and owners are prepared to sacrifice some of the value to go down their preferred exit route.
Poor financial performance is also a hurdle many owners think they need to overcome before giving thought to an exit.
This is flawed logic!
Performance drives value, not exit strategies – owners need to address financial performance, but it needs to be considered in conjunction with exit strategies. If different options to improve financial performance are available, the one that fits better with an identified exit strategy is likely to be the right one.
- The veterinary industry has, for a few years now, been going through a lot of consolidation. For those veterinary practice owners who don’t have a planned route to the exit door, now is the time at least to work out which floor the door is on and who might be on the other side of it.
- If you can identify an exit strategy (or strategies), make sure it informs the ongoing decisions taken in the business.
- If you have competing interests among different owners, try to avoid letting them fester so resentment grows and positions become more entrenched.
- Value is only one aspect of the exit – focusing on the right exit strategy will drive value.
- Try to run your business with one eye on the exit door – what will potential buyers be looking for when they take over the business?