The contemporary landscape in veterinary services is being transformed by corporate consolidation. While independent practitioners still operate the majority of veterinary hospitals and clinics, corporate-owned practices account for an increasing percentage of market share. If you are considering selling your veterinary practice to a corporate consolidator, it takes a skilled veterinary attorney to protect your interests, increase value, and help you prepare for the future.
Mahan Law represents clients who are buying and selling veterinary practices throughout the nation. While some veterinarians can benefit from a private sale or an associate buy-in, selling to a corporate consolidator may be an option for those who are close to retirement or looking to eliminate the management and administrative burdens of owning a practice. When you consult us, we will guide you through the process of a corporate consolidation so that you can make the best decisions about your veterinary practice and your future.
How does selling to a corporate consolidator work?
Whether or not your veterinary practice is for sale, you may have been contacted by potential corporate buyers. Before you make any agreements or sign any documents, it is crucial to consult a lawyer who is experienced in the veterinary space. Our founding attorney, Anthony Mahan, owns a veterinary hospital and serves as in-house counsel to over 40 independent veterinary hospitals across the nation.
As a fellow veterinary professional, he has first-hand knowledge of what corporate consolidators look for in a veterinary practice, not the least of which is revenue. In addition, their method for determining valuation is driven by several factors that contribute to revenue multiples and higher purchase pricing that independent veterinarians.
While selling your veterinary practice to a corporate consolidator can be lucrative, it also means that you may relinquish control of your practice. At the same time, this arrangement will allow you to focus more fully on practicing veterinary medicine and treating pets.
Mahan Law is here to guide you through all phases of corporate consolidation. Our comprehensive services include:
- Negotiating Sale Terms — Our team of valuation experts can help negotiate the comprehensive sale terms, including the purchase price, rollover equity, earnouts, revenue guarantees, tax allocations, Lease terms, and the employment agreements if you intend to stay on, which is typically a requirement in a corporate consolidation.
- Letter of Intent — Selling a veterinary practice to a corporate consolidator is similar to a traditional sale in that the deal is initiated with a letter of intent. This nonbinding legal document states the seller’s and buyer’s mutual intent to enter into the transaction and also describes the terms of the deal. Generally, the key components of a letter of intent are the purchase terms, non-disclosure requirements applicable to both parties, the seller’s obligation not to consider other offers, and the buyer’s right to conduct due diligence of the practice’s financial and patient records. While non-binding it is imperative to negotiate the key terms upfront to compare corporate offers and proceed in a good faith effort to close the deal.
- Due diligence — Our team work with accountants and financial advisors to ensure that the books and records subject to due diligence accurately reflect the gross revenue of your veterinary practice and the valuation multiple. We also assist with appraisals, financial disclosures, clearing titles and obtaining lien releases, and obtaining tax release certificates.
- Confidentiality agreement — In a corporate consolidation, the buyer will rely on teams of powerful attorneys and financial professionals to conduct due diligence and evaluate your books and records. Our team will work to protect your sensitive business information by drawing up a confidentiality and non-disclosure agreement.
- Purchase Agreement — Because corporate consolidators often rely on private equity investors for funding, the purchase contract will likely include terms to keep the owners interested in the future profitability of the practice such as earnouts, holdbacks, revenue guarantees, employment contracts, joint venture arrangements, rollover equity, profit sharing, etc.
- Lease Agreement — If you own the real estate you will also need to negotiate long-term lease terms or obtain a commitment from the landlord to continue the lease and release you from liability.
- Post Closing Obligations — Every practice transition will have post-closing obligations to minimize indemnification for bills arriving after closing, closing payroll obligations, winding-up or dissolving your legal entity,
Knowing that selling your veterinary practice may be the single largest financial undertaking of your lifetime, you can count on our experienced veterinary attorneys to protect your interests. We will stand by you every step of the way and help you plan for a seamless practice transition.
The Benefits of Working with Mahan Law
Selling a veterinary practice to a corporate consolidator is not only about negotiations and preparing legal documents — it is also an emotional experience that involves serious concerns:
- How much control or ownership of my veterinary practice will I retain?
- How will my staff react to the intended sale and how do I care for them in the sale process?
- How will selling my veterinary practice to a corporate consolidator impact my legacy of providing quality care?
At Mahan Law, we can help to address those concerns by providing you with informed representation and dependable service. By understanding your objectives, we will negotiate deal terms that serve the best interests of your practice and your patients. We also pride ourselves on offering flat fees for practice transition services, rather than hourly fees, when possible.
Contact Our Experienced Veterinary Attorneys
Mahan Law collaborates with a respected network of co-counsel attorneys who represent veterinary professionals across the country. We regularly help veterinarians navigate practice transitions, including sales to corporate consolidators. Our legal team has a well-earned reputation for providing veterinarians with quality, affordable service based on a flat fee. Above all, you can trust us to help make selling your veterinary practice to a corporate consolidator a satisfying and rewarding experience. Please contact our office today to speak with our experienced veterinary attorneys.