If you’re considering selling your veterinary practice, there’s a lot you need to consider. Unfortunately, as you wade through the sea of information on this topic, you’re bound to come across some inaccurate information. Specifically, there are a few pervasive myths out there about veterinary practice sales that can put a huge damper on your sales plans if you let them. Below is an overview of the most common of these myths.
Location Isn’t Important If the Practice Is Profitable
Although it’s great if your practice is profitable, never discount the importance of location. Even if your business is in good financial shape, location will be a deciding factor for many buyers. Therefore, you must take your location into consideration when pricing your practice.
Small Practices Are Easier to Sell than Big Practices
Small practices and large practices each present their own unique selling challenges. From a buyer’s perspective, a small practice often means smaller profits. In addition, large practices come with their own pitfalls. Therefore, you shouldn’t make assumptions about the sale of your practice based solely on its size—there are advantages and disadvantages to both during the sales process.
You’re Better Off Selling Stock than Selling Assets
There are generally two ways to sell a veterinary practice: selling stock and selling assets. By selling stock in your practice, you may be able to avoid certain taxes. However, you also severely limit your available pool of buyers and the amount many buyers are willing to pay. The majority of buyers want the option to depreciate or write off some or all of the purchase price of the practice. With a stock sale, the buyer loses the ability to claim any depreciation, and your tax savings are minimal if the sale price of your practice is allocated properly. Therefore, you’re almost always better off selling assets over stock.
You Can Value Your Practice Based on a Previous Year
It’s common for businesses to experience fluctuations. However, when valuing your veterinary practice, you can’t ignore recent down years. Rather, when valuing your practice, you are generally expected to consider the previous three years. However, even if a recent year wasn’t as profitable as you’d like, keep in mind that every business has down years, and your potential buyers will likely be willing to look past a single underperforming year.
Contact Our Experienced Veterinary Attorneys
Selling a veterinary practice can be complicated. Therefore, if you are a veterinary practice owner who would like to explore your selling options, you need an experienced veterinary attorney on your side. At Mahan Law, we understand what it takes to successfully sell a veterinary practice. When you come to us for help, our experienced veterinary attorneys will work hard to ensure that your veterinary practice sale is a rewarding experience. Please contact us today to schedule a consultation.