Advice for Young Veterinarians Looking to Buy a Practice

Karl Salzsieder, DVM, JD, CVA, Owner of Salzsieder & Associates, TPSG, LLC / DBA Total Practice Solutions—Northwest, gives advice to young veterinarians who are looking to buy a practice.

Interview Transcript (slightly modified for readability)

“If they have personal debt beyond the student education debt, that definitely affects their borrowing ability, and so that can be an issue. It’s advised to young buyers not to be extravagant [by saying,] ‘I’m out of veterinary school, let’s get that new car.’ Those kinds of things should be held back. Otherwise, if their credit score is good, [debt] is not a big issue for lender’s because the veterinary profession, in general, and veterinarians, are such hard workers [that] they rarely default [on a loan].

The veterinary industry has somewhere from a .3% to about a 3% default rate, which is unheard of in other areas, especially consumer areas. This is a reason why borrowing for veterinary practices allows what we call, cash-flow lending, where there is only 40-50% of tangible assets, and the rest of the purchase is goodwill (ie, intangible, [and] nothing for the bank to repossess if they wanted to in [the case of] a default). [The lenders] are happy with our profession’s low default ratio and so if they [the young veterinarian] have reasonable debt, the banks will work around that.”