practice purchase

RE: practice purchase

Hannah Wynne Richards — Fri, 30 Sep 2016 08:36:35 GMT

Bob At your age ( and mine ) banks don't trust us not to snuff it, so they automatically knock 40% off our assets to allow for the thieves (Inland Revenue)

Wynne

RE: practice purchase

Braden Collins — Fri, 30 Sep 2016 02:55:22 GMT

When we purchased our first clinic, the boss wasn't looking to sell, but realised it was going to be an easy sale, he would have opposition he could work with (we purchased the branch clinic), and the alternative was us setting up in opposition would reduce the value of the clinic if he held on to it.

I would say you're best off having a chat with the partners and being very proactive. The worse they can say is "no". If you're up front with them, they should be honest with you.

If you don't talk to them, they may not think you're keen and sell to a corporate without you knowing. If they say no, you can at least know where you stand and plan to move on.

RE: practice purchase

An On MRCVS — Thu, 29 Sep 2016 14:11:49 GMT

thanks everyone for the advice. I obviously need to speak to an accountant etc about this but I am at a very early stage and not having access to detailed accounts will make it difficult.

I am at the stage (well past) in my career where I don't want to finish it working for someone else and want more control of my own future. I know it will be stressful as I grew up with self employed parents so I am aware of the issues but its something I want to do.

I need to get a more concrete offer on the table but they are quite slow when it comes to making decisions. My choice is really

1- stay as an employee and end up working for a corporate which I am not keen about

2- buy in to this practice.

3 - start elsewhere.

2 is my preferred option as 3 would leave my family and I under severe financial pressure and much as I would like it I cant take that risk but I may have to bite the bullet.

I will have to get more proactive and get the accounts, a concrete timeline and talk to accountants. I have discussed it with them several times but it is always kicked into long grass and no figures etc are forthcoming (which makes me nervous about the carrot scenario).

Thanks everyone for the advice, I obviously wasn't expecting financial advice just ideas of what to do next and who to speak to, Anval seem interesting and Thanks Michael I will pm you when I know a bit more.

RE: practice purchase

Michael Woodhouse — Thu, 29 Sep 2016 12:11:04 GMT

I have some comments on different sources of professional advice that you can PM me for - I'm not putting on the open forum.....

RE: practice purchase

Michael Woodhouse — Thu, 29 Sep 2016 12:09:48 GMT

[quote user="Bob Russell"]I find my banks completely useless for borrowing despite having shed loads of security to offer![/quote]

HSBC have been amazing with us - lent us a lot of money with little security to buy the business, and then again recently with a commercial mortgage.

If you want to own the practice then you do need a valuation. I agree with its only worth what someone will pay, but if the corporates will pay more than you then you may lose out. You will also need the valuation for the bank and a business plan.

Owning a practice is the best thing I did, but it does create a lot more work - so long as you are OK with that. Everything becomes your problem.

If you want to do it, the numbers stack up and you can get the money - do it.

RE: practice purchase

Bob Russell — Thu, 29 Sep 2016 11:59:37 GMT

Treat every comment on here as being a personal opinion! Very valuable and interesting but not financial advice in any shape or form!

The most important question is "Do I want to own this practice?"

If you do then have a chat off the record with one of the accountants and find out what they will charge you for detailed advice. They usually have bank contacts.

I find my banks completely useless for borrowing despite having shed loads of security to offer! Barclays offered me a car loan a few years ago for 26%! Did not take them up on their kind offer.

RE: practice purchase

Anthony Todd — Thu, 29 Sep 2016 10:20:09 GMT

[quote user="Richard Carter"] break-ups of partners can be very bad in some cases.[/quote]

Tell me about it!!

As my wise old accountant said, and I repeat again:

"Think, think, and think again, partnership is like marriage, only a hundred times harder to get out of"

PS You can only be charged "market rent", but just ask your solicitor about "best rent".

RE: practice purchase

Iain Richards — Thu, 29 Sep 2016 09:57:34 GMT

Anon, Although you'll get some good sense by asking that question here, an analogy can be drawn with the client asking the bloke in the pub about their animal. If you are serious, take some proper advice - Anval are great (no commercial interest). They'll give sensible guidance. I'd also speak to the current directors. They may be wondering why you haven't done so and will perhaps conclude no-one wants to buy, so will sell to someone else. You say "not that well run" but then say a great team and working environment. Sounds like a well run practice to me. Join SPVS and use their list, lost of folk there who've bought/sold/started up. Good luck and have fun

Iain

RE: practice purchase

Hannah Wynne Richards — Thu, 29 Sep 2016 08:36:06 GMT

Buying in sounds good to me

Wynne

RE: practice purchase

grumpyoldman — Wed, 28 Sep 2016 18:29:37 GMT

Corporate take overs seem to go in waves with a local domino effect . It starts when people were getting into their 50s + age group, then someone gets ill and thinks lets sell for top money while we can, several other local practices follow, logical to walk away with a clean break and a massive bag of swag instead of soldiering on without any real energy effort and enthusiasm.

RE: practice purchase

An On MRCVS — Wed, 28 Sep 2016 17:36:36 GMT

thanks, really interesting points that I hadn't thought of.

The practice is owned by 2 directors (ltd co) one would be retiring so 50% of the business would be up for purchase. The building is owned by the two of them and the company leases it from them which I believe is their retirement policy, I am pretty sure this would be out of reach and I wouldn't want to be stung with sky high rent rises to pay for their retirement.

The fact that it currently would be 50% takeover with 1 remaining director (+ 1 new) hopefully would mean that a corporate takeover is less likely but as has been pointed out they can pay far more than its worth and I can understand why they may take it but as the younger director is no where near retirement I hope this is less likely.

I understand what you mean about open and frank discussions and this is where I need to be heading, I am not particularly financially savvy but will have to work at that.

the staged purchase is an interesting one and something that I hadn't heard of which may be a good opener as the older partner last year dropped to part time so this may be an option.

RE: practice purchase

Richard Carter — Wed, 28 Sep 2016 17:20:15 GMT

point 6 - one of your advantages of the a hire-purchase approach where you buy 50% (or more) over 5 years either by salary sacrifice or paying some of your dividends if you are a limited co to cover the 'loan' from the practice is you still have a stake in the business and can still be earning. There are some tax advantages for the boss re capital gains for a staged take over and it means you are serious and in for the long haul.

also need to speak to a solicitor - break-ups of partners can be very bad in some cases.

RE: practice purchase

Anthony Todd — Wed, 28 Sep 2016 17:10:53 GMT

A few things come to mind probably in order of importance.

1 A practice is worth exactly what someone will pay for it! Valuations are a waste of money.

2. Working with a partner, particularly someone who is "getting out" usually means they will get 50% of profit but do between 0% and 20% of the work.

3. Make sure you will own 100% in x years and/or see above re workload.

4. Your own analysis of the practice and the value is the only one that is accurate.

5. If it stacks up GO FOR IT! Working for yourself can't be beat!

PS 6. Explore a private mortgage with the owner; it's a win/win, easy to do, and it'll save you a fortune and give him/her more than they could ever expect.

RE: practice purchase

Gillian Mostyn — Wed, 28 Sep 2016 16:57:44 GMT

I believe that corporates will pay approx 3x what a private sale would be likely to fetch. If the practice owner is looking to fetch the best price (not unreasonable) then it is unlikely you'll be able to compete. It would be a shame to spend lots of money getting valuations etc to find that out later!

In business, you need to be able to have open and frank discussions about plans and finances. You need to have those discussions at an early stage. If your employer isn't willing to discuss their plans with you, I'd be worried there is a good reason for that.

RE: practice purchase

An On MRCVS — Wed, 28 Sep 2016 16:50:30 GMT

This is an area I am unsure about, how to fund it but as you say the input of a good accountant will be needed. I am at an early stage, I think they are floating the idea but not ready to go further as yet and as I said it does concern me that its a bit of a carrot. (been there done that before!)

I am at the 20 year post grad mark and am eager to go further rather than just working for someone for the rest of my career, I know it will be stressful and a steep learning curve but I feel that I need to do it. they haven't set anything in stone yet so I am reluctant to speak to accountants as yet partly as I don't have (cant get) the full accounts. Once I have a more firm decision from them then I will need to hunt a good accountant in the vet market.

I know of Hazlewoods and moore scarrott(?) but would appreciate any other contacts.

thanks

RE: practice purchase

Bob Russell — Wed, 28 Sep 2016 16:20:06 GMT

The flip side of this is corporates are still snapping up practices and apparently paying well for them. Probably a reflection on their ability to use cheap money to purchase.

I have cheap loans but the bank appears absolutely resistant to further lending however much security I have in property etc. Lots of talk about plenty of money to lend but not much else.

Any purchase must be affordable so the input of a good accountant is invaluable.

RE: practice purchase

Will McMullan — Wed, 28 Sep 2016 15:56:47 GMT

I'm not sure on the finances of buying in but when you say 'don't want to rock the boat...', I think you perhaps shouldn't be so cautious. If you are experienced and valued enough for the boss to be considering selling to you, I seriously doubt he/she wants you to leave. Your turnover/wages ratio is pretty good and replacing experienced vets is a total nightmare, and expensive, so maybe you should push for the pay rise you want? In terms of buying in, consider your enthusiasm and dedication, as you say the business isn't particularly well run, so if you are up for it, you may be able to improve/expand it quite a lot?

Good luck!