Buying a veterinary practice as an employed associate
Here are some basic guidelines to make sure an associate buy-in will work at your veterinary hospital.
Buying in as an associate or partner
There are advantages to working at the practice you want to buy. You know the owner, the staff, the pet owners, the patients, and the level of medicine practiced. You may be familiar with the practice's cash flow and accounting practices.
There are drawbacks, however. You may find it harder to negotiate with someone you know and like, especially because valuation should be independent of the owner. Pricing can be difficult because the seller may have a set price in mind that is unrealistic or unfair.
And new wrinkles arise as the ownership changes: Will this be a partnership or a dictatorship? Will you and the owner and any other partners still be friends? You must understand who has control and to what degree on various matters of the practice, and spell it out in writing. Do not leave it to a simple handshake and verbal agreement.
As a general rule, you should work together for at least one year first before becoming a co-owner, and you should discuss all aspects openly at the earliest possible moment.
If this is the right practice for you, try to buy 50 percent or more of the practice up-front and plan for any necessary changes in structure among sole proprietorship, partnership or corporation. And if you're going in with the owner or another partner, ensure that your written agreement adequately spells out how you will get back out of ownership if things go wrong. A well-written agreement can help prevent future nightmares and litigation.
This is adapted from Your Veterinary Practice: Buying, Selling & Merging (Simmons Educational Fund). Dr. Byron Farquer, Dr. Doyle Watson and David McCormick work for the veterinary practice appraisal and brokerage firm Simmons & Associates.
