A buyer's and seller's guide to a seamless veterinary hospital transition dayWhether you’re on your way in (hello, entrepreneurship) or on your way out (hello, retirement), prepare yourself for your hospital transition with these tips.
Transitioning a veterinary hospital from one owner to another is a significant milestone in a veterinarian’s professional journey. For the aspiring owner, purchasing a hospital and transitioning into the role of owner signifies the beginning of their entrepreneurial journey, a new chapter filled with opportunities and challenges. For an established owner, their hospital is likely their most valuable financial asset, (while also representing years of hard work — creating their own culture, building their team, fostering a sense of community, and, of course, caring for patients). For both buyer and seller, it's a thrilling and nerve-wracking experience. But here’s the deal: a seamless transition is all about the prep work. In this article, we’ll explore considerations for a successful transition for both buyers and sellers.
So, about that prep work
Before you dive into the transactional phase of the transition process, both buyers and sellers should be on the same page philosophically (or at least be able to acknowledge their differences). Every hospital acquisition is different, so if you're an aspiring owner, it's important to set your expectations and know what you’re looking for. Take some time to envision what you want for your future hospital. Consider the location, the building, patient base, cash flow, equipment, staff, and your own mission, vision, and values. Answering these questions will help determine if you're searching for a hospital with untapped potential or looking for a well-oiled machine. Working with a consultant can help identify these areas of potential improvement and propose modifications that will elevate the hospital. If you’re unsure what you’re looking for, Provide’s practice marketplace is also a good place to start your search.
On the flip side, sellers should also clarify their motivations. Are you simply wanting to cash out, retire, and move to Hawaii? Or do you want to preserve your hospital's legacy? These answers determine whether you should sell to someone who shares your values as you consider potential buyers. Whomever you choose, finding “the right buyer” who has a shared veterinary hospital philosophy will set your team and patients up for a good experience when transition day arrives. When searching for the right buyer, you may utilize a broker who specializes in matching buyers and sellers in the veterinary field and has valuable insights and connections.
When it comes to veterinary hospital philosophy, this includes not only the clinical aspects but also the overall approach to patient care, practice management, and business ethics. A philosophical match between buyer and seller can lead to a smoother transition and a more harmonious post-closing relationship. At the very least, it’s helpful to know your differences. This can help inform your transition plan (more on this below). Check out our article for more considerations on how buyers can navigate a hospital acquisition.
Can you hear me now?
One of the fundamental pillars of a successful hospital transition is effective communication between the buyer and the seller. Before transition day, establish a clear line of communication so you can have open and transparent dialogue throughout the process. Discuss, both verbally and in writing, expectations, goals, timelines, and any concerns that may arise before the sale of the hospital occurs. Nearly as important as strong communication between the buyer and the seller is communication between the seller and their legal team, staff, and patients (most importantly, clarifying the transition plan). If a legal issue arises during communication, ensure that you discuss the issue with your attorney, as it could affect your long-term liability or ultimately cost you money either immediately by purchase price adjustments or allocations on purchase price. (Play it safe and loop your lawyer in early; not fully comprehending the complexity of a situation could cost you in the long run.) As the seller, you’ll also want to reassure that your staff and patients will be in good hands with the new owner. Communication can promote a comfortable and harmonious environment, which can help reduce any potential employee or patient turnover.
Articulate your transition plan in advance
As a buyer, you’ve been dreaming of becoming a veterinary hospital owner. But what does ownership look like to you? Take time to put your transition plan on paper. What’s your hospital’s "why"? Having a clearly defined business strategy, goals, values, and timeline can help you stay focused and not just start making changes for the sake of making changes. Taking time to plan can help set the stage for the type of owner you want to be. Outlining how you intend to manage patient care, your staff, and day-to-day operations can help you engage more effectively with consultants and other professionals who will be assisting you in the transition. The clearer your plan, the easier it will be to implement it smoothly.
It’s important to acknowledge that even though you have your own goals for how your future hospital will operate, being aligned with the seller about some of the details of the transition will be beneficial to everyone. Take time to hear their own transition plan. Do they have handshake deals with their staff, patients, and community? Then take time to share your own plan. By working together, you can implement changes gradually. This will ensure that each of your modifications is intentional and that you are not making changes for the sake of making changes.
Transition day (the passing of the baton)
So, you made it. Transition day marks the culmination of a journey filled with anticipation, negotiation, and preparation. The baton officially passes from seller to buyer. It’s both a thrilling and nerve-wracking experience for all parties involved (hopefully more of the former than the latter).
Transition day essentially unfolds in two distinct phases: pre-closing and post-closing. Initially, there are experts who provide guidance before the sale, and their roles might conclude at the closing date. This group typically comprises attorneys, consultants, lenders, and brokers. After the sale is sealed, the attorney's responsibilities cease, documents are signed, and the consultant and lender may not be involved in the transition day. This leaves only the buyer and seller, who often have limited post-closing communication. However, if you did all of the prep work, this day should feel effortless!
A win-win for sellers and buyers
Navigating a hospital transition in the veterinary industry requires a shared commitment to success, effective communication, and careful planning. Buyers should develop a clear transition plan and engage consultants to identify areas for improvement. Sellers should communicate their expectations to brokers to facilitate better matches with buyers. When both parties share a similar philosophy and work together, the transition can be a smooth and successful process.
If you’re ready to take your hospital ownership dreams into your own hands, be sure to visit getprovide.com to pre-qualify and browse our practice marketplace, or check out our resources page for more expert insights.
Editor’s note: This article has been adapted from episode 26 of The Path to Owning It podcast with Dr. Lee Maddox, owner and attorney of Maddox Healthcare Law. Listen to the episode for more information on this topic and much more!
This content is for informational purposes and does not constitute the rendering of legal, accounting, tax, or investment advice or other professional services by Provide or any of its subsidiaries or affiliates, and it is being provided without any warranty whatsoever. Please consult with appropriate professionals related to your individual circumstances.
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