This is a paid sponsored content article from Simmons and Associates – Intermountain.
The veterinary profession is experiencing rapid growth in the corporate market. The allure is obvious – the highest dollar, relief from ownership stress, and they won’t change anything! It’s understandable why so many are capitalizing on this boom!
Before you sign, be sure to do your research and ask the right questions. Although it may a dream offer, you could still be leaving a lot on the table.
Here are areas to consider when reviewing any corporate offer:
Are you a good match?
Every corporation will court you. Take this time to learn about them: Their culture, their management style, their goals. Almost all want to preserve your culture, and all have good intentions – but they all change something.
Ask questions to help you determine this: What is their vision? Do they intend to sell or go public? How many other practices do they own? Who is the regional support team? What is their employee turnover rate?
Price and Term
The first offer you receive may look perfect, but could it be better? You won’t know how much better unless you negotiate the price and have other corporate offers for comparison.
The offer structure can also vary greatly. While some will pay 100% cash, others have more structured offers including contingency notes, upside notes, equity, or even joint ventures. You need to understand all these terms and what kind of risk they pose.
Real Estate
Many corporations won’t purchase the real estate, leaving you as landlord. You need to negotiate a real estate lease, even if you plan to sell in the future. Rent affects the practice price, so understanding fair market rent is important in maximizing your best deal. Other things to consider: How long is the lease term? Will they offer a corporate guaranty? Who is responsible for repairs, maintenance, or possible future expansion?
Employment Terms
All corporations require you to stay on after the sale. Your contract is negotiable and affects your offer. To negotiate, know your area’s average compensation and what their “standard” compensation package includes. Other things to consider will be your role after the sale. Will you be medical director? Can you reduce your schedule? What are your benefits?
Also, advocate for your team. You have spent years creating and supporting your team, you obviously want them well cared for. They should be getting the same, if not better, compensation and benefits with the transition.
Contracts/Leases
If you have equipment leases or lab contracts, it could be best to have them assumed. It is generally expected all leases and contracts are terminated at closing. You could face financial penalties if you terminate contracts early, so you want to be sure these are carefully handled.
There are many factors to consider and many details to manage in a sale beyond the price. Having an experienced partner at your side can help you navigate the many intricacies of a sale and help you achieve the best outcome. You can rely on the expertise and guidance of the Simmons and Associates – Intermountain for all your selling needs. Contact Kate Owens, DVM, MBA at [email protected] or 303-729-0870 to learn how we can help.
