If you are considering buying a veterinary practice, a successful transaction hinges on performing thorough due diligence. The best way to verify that the practice is in good financial condition, as well as to avoid surprises and disputes, is to consult with an experienced veterinary attorney.
Mahan Law provides professional due diligence services for veterinary practice transitions nationwide. As the owner of a veterinary clinic, founding attorney Anthony Mahan is keenly aware of the challenges in acquiring a veterinary practice. Whether you are seeking to gain entry to the veterinary space, or a strategic acquisition to grow your practice, you need the informed representation we provide.
When you consult with us, we explain what to expect from due diligence and help you navigate the process. Above all, we will work to protect your interests and help you engage in a successful transaction. Please contact our office today for a free consultation.
Conducting Due Diligence in Veterinary Transactions
After you have entered into a letter of intent, it is crucial to conduct thorough due diligence to learn about the targeted veterinary practice’s finances, patients, suppliers, proprietary information and to verify representations made by the seller.
In short, effective due diligence involves reviewing the following information:
- Tax returns and financial statements for the last 3 years (including the most recent interim operating income statement)
- Patient records
- Fee schedules
- Staff details (e.g. salaries, benefits, length of service with the practice)
- Inventory of equipment/furniture included in the veterinary transaction
- Accounts receivable aging report (showing unpaid balances and the duration they’ve been outstanding)
- Production summary report (showing the number of times certain procedures have been performed and the amount billed for those procedures)
- Office lease (if real estate is not included in the deal)
- Listing of the practice’s contracts
Given the volume of data and information that needs to be reviewed during the due diligence phase of a practice acquisition, it is wise to work with an experienced veterinary lawyer.
How Mahan Law Can Guide You
As a DVM, your education and training is directed for the most part to animal care, but there are countless business considerations involved in acquiring and operating a veterinary practice. You may not have the background or resources to pore over the financial reports and other pertinent information that is customarily reviewed during the due diligence process. That’s where Mahan Law comes in. Our veterinary attorneys have the skills and experience to oversee the due diligence process by examining:
- Financial reports — Reviewing three years worth of tax returns, financial reports and interim profit and loss statements requires careful attention to detail so that no relevant facts are overlooked. By collaborating with a respected network of financial professionals, we will determine whether the veterinary practice is in good financial condition and work to uncover any existing or potential legal liabilities.
- Patient Records — Similarly, examining the patient records is critically important so that you can ascertain the number of patients the veterinary practice treats (e.g monthly, annually). Our legal team will look to the production summary report to make sure that the seller has not misrepresented patient information.
- Staff records — Our veterinary lawyers will review the staff records to assess the gross wages of the practice and review the benefits currently being offered. Proper due diligence here can help you learn how long staff members have been with the practice and, more importantly, determine whether anyone is related to the seller. We also encourage you to interview staff members to gain a perspective of the practice and determine its future staffing needs.
In addition to examining the books and records, thorough due diligence also requires evaluating the condition of the practice. Repairs, cleaning or repainting may be needed and it may be necessary to replace equipment and furnishings. If so, it is critically important to calculate the costs to complete the work, which can be taken into consideration when negotiating the purchase price.
At Mahan Law, our due diligence services will give you confidence to move forward with the practice acquisition. At the same time, we provide ongoing counsel through each phase of veterinary transactions. Our experienced veterinary lawyers can assist in negotiations and determine the most efficient way to structure the deal.
Before the sale is completed, it may also be necessary to conduct a final review and audit of the patient records and appointment book to verify the details. Ultimately, navigating the complexities of a veterinary practice acquisition requires the due diligence and unmatched personal service we are known for providing.
Contact Our Experienced Veterinary Lawyers
At Mahan Law, we leverage our extensive experience to help our clients engage in successful veterinary transactions. As fellow veterinary professionals, you can look to us for trustworthy advice and guidance. Our legal skills and financial acumen make us the informed choice in due diligence services. Please contact our office today to consult with one of our veterinary lawyers.