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buyer… especially if [the owner] started the practice and it’s his little baby.” “The takeoff and landing are the
toughest parts of the deal. Getting the fair market value is the takeoff, and the closing is the landing,” he said. “I’m very pleased with the price [he received for his practice], and I suspect I got more than if I was on my own.” Janet McKim and Jack Love, partners
in business and marriage, had a similar experience when they tried to sell their practice in Middleburg, Va. “At first, we tried to ‘grow’ a buyer
Whether you use a broker or sell the practice yourself, an important step to take before you sell is maximizing your practice’s value.
with associates,” McKim said. “Our goal was to transition them to the owner and we would work for a time as part- time doctors. We tried that twice. Both times ended badly. Both times cost us associates.” In 2006, they consulted with a broker
who, they say, gave them helpful advice for increasing the market value of their practice so they could sell in 2008. “I can’t say strongly enough that peo-
ple need good help before and during a sell,” Ackerman said. “It is a special- ized transaction. There’s a lot of moving parts to it. I would encourage owners to touch base with an attorney, a financial planner and an accountant. Tax-wise, how you structure the deal can make a big difference.” Of course, exiting your business is
only one part of your retirement. Accord- ing to Ackerman, a recent NCVEI study reported that 50% of veterinarians do not know how much they will need to retire. Financial experts recommend talk- ing with a financial consultant about all your income and investments to create a full retirement plan. “Do not depend on your practice to
fund your retirement entirely,” Love said. “Start early in your career, and contrib- ute to a Roth or other retirement fund. Make it an automatic payroll deduction so you learn to live without it painlessly. Contribute the maximum each year. That cushion can help you make less panicked decisions as you near retirement.”
Prepping for sale Whether you use a broker or sell the
practice yourself, an important step to take before you sell is maximizing your practice’s value. “The dilemma for owners who want
to retire often is you are older and look- ing to slow down, but from an asset-max- imization perspective, before a sale is not the time to slow down,” Ackerman said. “The time you should be working your hardest is the first 2 to 3 years you own your business and the last 2 to 3 years before you sell it.” “We both worked extra hours and just
used a part-time relief doctor to decrease our payroll expenses,” McKim said. “We watched other expenses closely and made no large purchases. We were always aggressive medically and sur- gically, but we stepped that up a bit to encourage more hospital cases, and we gave the hospital a bit of a face-lift, mostly by painting inside and out.” “Start years before you are going to
retire,” Love added. “You hear that all the time, and it is true. Your first, second and maybe third exit plans may not work. Be patient. Be persistent.” McKim and Love recommend that,
if possible, owners should also own the land and building where they practice. “With values down right now, it should be a good time to buy. As that value increases, it will mean more dollars toward your retirement,” McKim said. “When you do sell the property, strongly consider a 1031 exchange. This will save tax dollars that you roll over into another income-producing property. In our case, [this was] a small, four-bay, strip shop- ping center.”
Your next act You will likely still play some role in
your practice for a period of time after you exit. “You almost never see the seller get to leave the day the papers are signed,” Ackerman said. “That’s rare. What [new owners] are buying is continuity of cli- ents. Many times, you need to stay to bridge the clients over to the new doctor.”
Trends magazine, April 2012
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