Veterinary practice transactions can be highly profitable for all parties involved. However, the process of buying and selling a veterinary practice can also be overwhelming and confusing. There are many issues to address during the veterinary practice transaction process, and mistakes made along the way can transform a dream deal into a nightmare. In this article, we discuss five common veterinary practice transaction missteps.
#1: Failing to Plan
Conducting a successful veterinary practice transaction takes time. Despite this, parties sometimes enter the process without planning adequately. This is a big mistake. By failing to plan, buyers and sellers place themselves at risk. Therefore, both parties to a veterinary practice transaction should carefully plan all aspects of the deal prior to signing a contract.
#2: Rushing into the Transaction
A related mistake that parties to veterinary practice transactions make is moving too quickly. Although parties are often anxious to complete the transaction, rushing through the process can create a host of problems. Often, rather than immediately drafting a sales contract, the parties to a veterinary practice transaction should consider executing a letter of intent. A letter of intent, as opposed to a contract, is not legally binding. Instead, this document outlines the parties’ preliminary understandings and agreements about the anticipated transaction. A well-drafted letter of intent increases the chances that the parties will sign a contract and execute the transaction.
#3: Failing to Perform Due Diligence
Closely relating to planning is the concept of due diligence. Neither party to a veterinary practice transaction should sign a sales contract until they have performed due diligence. Due diligence typically involves several steps, including:
- A thorough examination of the practice’s premises, inventory, assets, records, financial statements, tax returns, client documents, personnel files, contracts, leases, accounts receivable, employment agreements, creditor lists, and more.
- An accounting of the veterinary practice’s liabilities and assets.
- A search for liens against the practice’s assets.
#4: Failing to Account for the Transition Period
A successful veterinary practice transaction typically requires a reasonable transition period. This benefits the seller, buyer, and the practice’s customers. The sales contract should clearly outline the transition requirements. At a minimum, the seller of the practice should agree to answer the buyer’s questions during the transition period and introduce the purchaser to the practice’s clients and employees.
#5: Failing to Utilize the Right Professionals
Finally, a successful veterinary practice transaction requires the right team. At a minimum, this team should include an accountant, a practice broker, and an experienced veterinary lawyer.
Contact an Experienced Veterinary Lawyer
At Mahan Law, our experienced veterinary professionals help both buyers and sellers of veterinary practices execute successful transactions. Therefore, regardless of whether you are buying or selling a veterinary practice, our experienced veterinary team is here to make your transaction a success. Please contact us today to schedule an initial consultation with an experienced veterinary practice attorney.