Selling Your Practice

“If you’re thinking of selling your business, it has to consist of something other than your labor. If your business can be sold and run without you, then you have a business. But if your enterprise could not exist without you, if you can’t leave it for 6 weeks at a time without negative consequences, then all you have is a job.” - Quote from Louis Barajas in “Taxing home business creates a new dilemma.” Vicki Torres, Los Angeles Times.
Will you ever stop working in your house call practice? If so, could you sell your business? Are you thinking of selling to a standard veterinary clinic? Think again – your clients use your house call practice because they can’t or don’t want to go to a veterinary hospital. Few if any hospitals would consider your business worth anything at all, unless they plan to add house call services.
What is it worth to another house call practitioner to purchase your business? One argument is that the value is zero since it is based almost entirely on “personal goodwill,” that is, on your individual personality. A great deal of the value of your practice is in you, an individual.
Although you may have put years of work into your practice, it will not be worth to others what it is worth to you. Leave behind the emotional attachment you have to the amount of work you’ve put in over the years. Instead think of the new veterinarian who could start his or her own house call practice right next door without any help from you at all. They can solicit clients in the neighborhood, and those clients can then write to you to request a transfer of their medical records.
Your practice value is mainly in potential income, which is based on the ability of another veterinarian to take over the business and earn what you earn. Since much of your earnings lies in your personal relationship with your clients, other veterinarians cannot “buy” that. They can buy your inventory, equipment, and client list. The value of client records can be compared to that of a fixed practice that closed its doors and only sold its records – that value ranges from 5% to 20% of the previous year’s gross income.
A house call practice’s records are worth less than those of a fixed practice, because a fixed location does have an impact on how “transferable” those records are (that is, how likely the buyer is to retain your clients). Your records and their transferability are affected by the terms of the sale. You can add value by setting up a transition time where you introduce your clients to the new owner. If you can take steps to help your clients accept the new doctor, then your records have more value.
Also important to the buyer are your reputation, strength of your name (directory ad, established business name), and well-maintained records with an established reminder system. An established relationship with a full-service hospital is also of value.
Selling a practice requires careful analysis of these and other factors. You can always open a discussion with another house call veterinarian to discuss the sale of your records, and consult with practice appraisers about the value they may hold, then negotiate from there.