Buying into a practice

RE: Buying into a practice

Anthony Todd — Mon, 01 Jul 2019 15:20:43 GMT

[quote user="Iain Richards"]ask for advice[/quote]

My experience could have been catastrophic; the practices were grossly undervalued by the profession's recommended and recognised expert.

The other side also got a valuation at, of course, some cost, which was way out too.

My experience with property valuers has been the same with gross under-valuations

The obvious concept that something is worth exactly what someone will pay for it seems totally lost on "valuers" in my experience.

RE: Buying into a practice

Iain Richards — Mon, 01 Jul 2019 13:49:43 GMT

[quote user="Dinu Catilina"]I would recommend working with Peter from Anval.[/quote]

Yup. Good man to ask for advice

RE: Buying into a practice

Anthony Todd — Mon, 01 Jul 2019 09:54:18 GMT

[quote user="Dinu Catilina"]From my recent experience, of course anecdotal evidence so take it as you wish. We tried to buy a practice for about two years but the bank said no right in the end of the process. [/quote]

I rest my case and see my earlier suggestion!

RE: Buying into a practice

Dinu Catilina — Mon, 01 Jul 2019 08:29:08 GMT

From my recent experience, of course anecdotal evidence so take it as you wish. We tried to buy a practice for about two years but the bank said no right in the end of the process. The practice was very profitable and in the end purchased by a corporate at a lot more than it was evaluated. In hindsight, even if the bank would have said yes to our initial evaluation we still had zero chances of success against corporate money.

[quote user="An On MRCVS"]My main reservation (other than not knowing re the finances yet) is the building which is owned by a previous vet-owner of the practice. The siting is good (although there is now some local competition that didn't used to be), but the building itself has seen better days (it's OK-ish size-wise (without any space to expand), but not being purpose built does have some limitations such as washing machines in patient prep area...). I think I could probably live with the building as it is though (the owner would have to approve any changes and those would likely be very limited in nature), so my main concern is what might happen to the building when the current owner passes away or decides he wants to sell it for apartments etc - I suspect the cost of the building would be beyond means to purchase, certainly in addition to loan required for buying into business (assuming can even get that).[/quote]

That's not a prefect building but you can work on it's advantages. It has character, and if managed well it can work. I have seen a very successful practice with numerous branches with theaters upstairs. If it worked for so long it will work for longer. Having a perfect practice, just like the elusive gold standard, can increase your costs tremendously and only add limited value to your business.

[quote user="An On MRCVS"]A relocation of the business to new premises in next 10 years would not be out of the question, but there must be some risk of alienating a loyal clientelle[/quote]

I would be surprised if it does. Loyal clients will follow you. We are situated in the middle of a road with one vet practice at each end and we are doing fine.

[quote user="An On MRCVS"]Finally, there's concerns over how loyal a loyal clientelle will be? [/quote]

Many will be. Some will not but they are the shoppers that move about and you have no control over it. You should do everything you can for clients to like you, make sure they remember your name, go over and beyond and if you can't buy in set up your own place as soon as the practice is taken over by a corporate. You will not fail!

[quote user="Iain Richards"]If you are in a "nice" area (eg small to medium market town or distinct area of a large city) then the clients are likely to be loyal. They will be happy with a move if they can park - end of![/quote]

Same thing we noticed.

[quote user="Iain Richards"]

You should be abe to get a loan - eg PPS have helpful folk and your bank may be surprisingly happy to lend.

[/quote]

I would recommend working with Peter from Anval. He was extremely helpful and delivered everything he promised when he promised it. Our experience with PPS was pretty poor.

Setting up your own practice doesn't have to be expensive.

RE: Buying into a practice

Iain Richards — Sun, 30 Jun 2019 21:41:00 GMT

If you are in a "nice" area (eg small to medium market town or distinct area of a large city) then the clients are likely to be loyal. They will be happy with a move if they can park - end of!

You should be abe to get a loan - eg PPS have helpful folk and your bank may be surprisingly happy to lend.

OR just set up on your own, especailly if the practice sells to a corporate. NEver been a btter time to set up an independent vet who is part fo the community. Good Luck

RE: Buying into a practice

Anthony Todd — Fri, 28 Jun 2019 13:04:53 GMT

[quote user="Bob Russell"]My first question would be 'do you really want to do this?' the second 'do I want to do this in conjunction with the other remaining vets?'[/quote]

As I always say consider doing a private mortgage so that you, and the seller, can tailor the terms, timings and all sorts of other factors between the two of you.

Of course the seller will be totally secured by a charge on the premises and/or the practice and will have the advantage of getting paid as and when he/she needs it and in any way, by the tailored agreement.

Any experienced solicitor and the accountants on both sides can draft a suitable agreement tailored exactly to the needs of both parties.

I cannot understand why more vets don't buy or sell using a private arrangement, there are enormous advantages, not just in fees and charges!

RE: Buying into a practice

Bob Russell — Fri, 28 Jun 2019 11:27:26 GMT

The practice now can be moulded by an enthusiastic team. If it is profitable then you can make it more so!

Don't undervalue goodwill as it provides a springbox to work from. It provides figures for a bank to use for borrowing risk.

Property tends to be a safe option long term so if you can buy then I personally would go for that as well. I dislike the idea that practices no longer tend to have bricks and mortar ownership behind them. I would expect the seller to build in some reassurance in the form of a lease.

If you require larger premises then leasing may be the right option (or the only one).

My first question would be 'do you really want to do this?' the second 'do I want to do this in conjunction with the other remaining vets?'

Will it be fun, challenging and ultimately a provider of sufficient income? If so go for it, if not think very carefully!

Make sure you get really good independent advice as this could reduce the risk of making a life changing mistake. The corporates may not be offering as much as they would have done a year ago so there might just be some bargains to be had.