Control your emotions during the sale of a veterinary practice
I recently received a kind letter from a client who wanted to thank me for some guidance I gave her while she negotiated the purchase of a veterinary hospital in New Jersey. Although I had helped her with much of the valuation and boilerplate documents, she told me that my most helpful contribution was to insist that she keep her anger in check. She managed to keep her end of the conversations civil, respectful and deferential. Consequently, she nailed down a great place at a great price. The happiness of owning a good practice will last her much longer than the temporary satisfaction of telling the seller that he was an egomaniacal, self-obsessed doofus.
I can't count the number of times I've seen emotion interfere with the decision-making and negotiation process. If it's true that people are their own worst enemies, there's no better example of that than when veterinarians do business with others.
Personal relationships in the workplacePerhaps I'm naive, but I've never understood why coworkers—including associates and practice owners—would rather spread gossip and complain to each other than muster the courage to respectfully confront someone causing them a problem in the workplace. There's a force field between the "front" (reception world) and the "back" (animal treatment world) that makes inhabitants of one world resentful and catty toward residents of the other. And none of the participants seem to realize how much damage this behavior does to their own financial and professional interests.
Countless times I've seen practice owners withhold contract renewals from associates because the practice owner insisted upon stirring the pot among the other employees. As an attorney trained to keep my lip buttoned when doing so is in my own best interest, it's hard to stomach the sight of a professional who gets emotional satisfaction out of gossip and character assassination at work. And to do so to the point of withholding a contract renewal? Wow.
Some veterinarians aren't above doling out equal-opportunity misery to their coworkers. Have you ever worked with another veterinarian who was capable and remarkably intelligent yet flew off the handle and threw instruments around the treatment area when something wasn't going well at home?
When such an emotionally explosive associate comes in to discuss a contract renewal, the employer may be so sick of the relentless childishness that he may hit the uncontrolled associate where it hurts: in the compensation clause of the subsequent year's contract.
The underlying thought process gnawing at the practice owner? Simple: "If this associate is so immature that he can't act like a professional among our staff, I'm going to hit him in the wallet for all the counseling and morale building I have to do behind the scenes to try to un-pollute our clinic work environment."
The role of minutiae in practice sales
While it's undeniable that the sale of a person's business is a very personal event, it's critical for a practice seller to minimize the role that emotion plays in the transaction. As any residential realtor will tell you, the price element in the sale of a house is emotion-dependent. No one wants to feel that they're "giving away" the home where a family raised kids and held weddings or wakes.
Much like the sale of a house, many veterinarians walk into practice sale negotiations without being able to set aside their profound feelings for the business and the effort involved to build it. To be blunt, it's hard for practice sellers to recognize—even when their lawyers and accountants gently try to remind them—that the potential buyer couldn't care less about the past 25 years or the hard work and dedication involved in developing good will.
When sellers are unable to temporarily shelve their feelings, especially if they insist on carrying out price negotiations personally, two potentially deal-killing scenarios frequently unfold:
1. The seller scares away potential buyers by acting insulted or outraged about the amount of an initial offer.
2. In instances where both parties have come close to a final price, the seller may become unglued when the buyer refuses to acknowledge his perceived value for minor items such as kennels, new flooring, a recently installed water heater and so on. I've seen sales go down in flames because a buyer didn't want to pay extra for the new TV the seller just installed in the waiting room or a furnace cleaning that "we only had a month ago."
It's hard to say who loses the most in these volatile discussions, which frequently end with mutual resentment and no sale. Is it the seller, who runs off the last person interested in buying his place? Or the buyer, who should've thrown in a few more bucks to mollify the guy who was about ready to sell him his little golden-goose practice?
Dr. Allen is president of the Associates in Veterinary Law P.C., which provides legal and consulting services to veterinarians. Call (607) 754-1510 or visit [email protected]