You have dedicated years to your veterinary education, and now that you've graduated, you're likely contemplating your next steps in the veterinary field. What comes after veterinary school? You have several options: you can join an existing practice, establish your own clinic, or explore the possibility of acquiring a veterinary practice.
If the idea of owning a veterinary practice appeals to you, you may be wondering how to go about purchasing one. The process of acquiring a veterinary practice involves entering negotiations with a practice owner who is looking to sell. However, this process isn't without its challenges, and you may find yourself feeling apprehensive during negotiations.
What are some key topics to steer clear of discussing when considering the purchase of a veterinary practice? There are several crucial points to bear in mind.
The Minimum Non-Compete Mileage
Fresh out of veterinary school, you're unlikely to have the capital needed to purchase a practice outright. Thus, securing financing from a local bank becomes essential. The lender's primary concern is ensuring your ability to repay the loan, often leading to the requirement of a non-compete agreement from the practice seller.
During negotiations, the seller may inquire about this agreement, particularly if they plan to continue practicing elsewhere. While some may not mind signing due to retirement, others may be more cautious. Typically, the bank sets a minimum non-compete distance the seller must agree to for loan approval—a detail best kept confidential from the seller.
Revealing this minimum distance could inadvertently give the seller leverage. It's prudent to remain vague unless directly asked. By withholding this information, you may negotiate a more favorable deal with the seller and secure better terms from the bank. Keeping your cards close to your chest is key; avoid disclosing the minimum non-compete distance provided by the bank.
How Much Financing You Have Been Approved For
If you've been through the home-buying process, you recognize the significance of securing financing before entering negotiations. Pre-approval can enhance your bargaining power, making your offer more competitive. However, purchasing a veterinary practice presents nuances compared to buying a home, especially concerning the disclosure of financing details.
While it's crucial for the seller to know you have financing in place, divulging the specific amount approved can work against you. Awareness of your financial capacity might lead the seller to maximize their asking price. Just because you're approved for a certain amount doesn't mean you're obligated to pay it. Your aim is to secure the best deal possible, necessitating discretion about your financing limit.
Moreover, revealing your approved financing amount might backfire. The seller may perceive the limit as insufficient, potentially leading them to question the practice's value and reconsider the sale altogether. It's prudent to navigate negotiations without disclosing the full extent of your financing. If you agree to a price surpassing your financing limit, you can always revisit the bank later to request additional funding.
Your Current Job Status
In your negotiation phase, it's wise to steer clear of discussing your current employment status. While it may be apparent to the seller that you've recently graduated from veterinary school, they might not be privy to your current employment situation if you've been out of school for some time. It's best to keep this information confidential. If you have a LinkedIn profile, consider temporarily adjusting your privacy settings to prevent the seller from gathering information through social media.
Revealing your current job status could inadvertently give the seller leverage. If they learn that you're currently unemployed, they might assume financial strain and attempt to exploit this by demanding a higher price. To avoid such scenarios, refrain from disclosing your employment situation.
During negotiations, the seller may inquire about various details, including your employment history, current salary, tenure at your job, location, and relocation timeframe. These inquiries serve to uncover information about your current job, all of which should be avoided. Any detail could potentially be used against you during negotiations, making it best to avoid such discussions entirely. The seller needs only to know that you're qualified to practice veterinary medicine, which inherently qualifies you to purchase the practice.
Tips For Negotiation
It's essential to recognize the pivotal role that effective negotiation skills play in this process. Negotiating the purchase of a veterinary practice involves navigating a myriad of complexities, from financial considerations to emotional dynamics. Whether you're a recent graduate venturing into practice ownership or an experienced veterinarian looking to expand your portfolio, mastering negotiation techniques is paramount to achieving a successful outcome. In the following sections, we'll delve into key strategies and considerations to help you navigate negotiations with confidence and achieve your goals in acquiring a veterinary practice.
Frequently Asked Questions
Q: What are the options available to me after graduating from veterinary school?
A: After veterinary school, you have several paths to consider. You can join an existing practice, establish your own clinic, or explore acquiring a veterinary practice.
Q: What does the process of acquiring a veterinary practice entail?
A: Acquiring a veterinary practice involves negotiating with a practice owner who is looking to sell. This process requires careful consideration and may pose challenges, leading to feelings of apprehension during negotiations.
Q: What are some crucial topics to avoid discussing when considering the purchase of a veterinary practice?
A: Several key topics should be avoided during negotiations for purchasing a veterinary practice. These include the minimum non-compete mileage, disclosing approved financing amounts, and revealing your current job status.
Q: How does securing financing play a role in acquiring a veterinary practice?
A: Securing financing is crucial for purchasing a veterinary practice, especially for recent graduates who may not have the capital needed to buy outright. Lenders typically require a non-compete agreement from the practice seller to ensure loan repayment.
Q: Why is it important to remain vague about the minimum non-compete mileage during negotiations?
A: Revealing the minimum non-compete distance could inadvertently give the seller leverage. It's prudent to withhold this information to negotiate more favorable terms with the seller and secure better financing from the bank.
Q: What risks are associated with disclosing the specific amount of financing approved for the purchase?
A: Disclosing the approved financing amount may lead the seller to maximize their asking price or question the practice's value. By navigating negotiations without revealing the full extent of financing, buyers can avoid potential backfire and revisit the bank later for additional funding if needed.
Q: Should I disclose my current job status during negotiations for purchasing a veterinary practice?
A: It's wise to avoid discussing your current employment status during negotiations. Revealing unemployment status may give the seller leverage to demand a higher price, making it crucial to keep this information confidential.
Q: What role does effective communication play in negotiating the purchase of a veterinary practice?
A: Effective communication is essential for building rapport and establishing trust with the seller during negotiations. Active listening, asking open-ended questions, and maintaining a professional demeanor can help buyers navigate negotiations successfully.
Q: How can I address concerns raised by the seller during negotiations for purchasing a veterinary practice?
A: Sellers may have concerns about the transition timeline, client retention, or staff management under new ownership. Buyers should proactively address these concerns by providing clear and transparent solutions to move negotiations forward.
Q: Why is it beneficial to leverage professional advisors during negotiations for acquiring a veterinary practice?
A: Professional advisors, such as attorneys, accountants, and practice brokers, bring specialized expertise and experience to the negotiation process. They can help buyers navigate complex issues, mitigate risks, and make informed decisions to secure a favorable deal.
At Dental & Medical Counsel, PC, we understand navigating the legal process can be tricky. We believe every veterinarian deserves the best advice and service so veterinarians can do what they do best, treat their patients. We make their lives easier by providing expert guidance, so they can focus on their personal and professional aspirations. We are veterinarian attorneys.
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About Ali Oromchian, Esq.
In addition to being a veterinarian lawyer for almost 20 years, Ali is also a renowned speaker, throughout North America, on topics such as practice transitions, employment law, negotiation strategies, estate planning, and more! Ali has helped hundreds of optometrists realize their professional goals and looks forward to aiding you in navigating the legal landscape.
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