Likewise, if you are looking to buy into a practice, the same rules hold. Don't promise co-workers raises, benefits or other
enticements to occur when you become an owner. You won't buy any love with anyone when you are on the other side of the administration
desk and can't make good on promises for which cash does not exist. It is a scary proposition when you have ultimate responsibility
for paychecks and payroll tax submission. Besides, you might undercut your negotiation opportunities with the current owner
when your promises imply she or he is just an old scrooge. Bad mouthing your current employer is not a good strategy for ownership.
Be a student of human nature. Do you know your normal personality or behavior style, that of your potential successors or
the person sitting across from you at the negotiation table? If you don't, then you might be limiting your success in all
phases of practice transitioning, leadership and client development.
Specializing in avoidance behavior can be a sure ticket to diminished practice value. Time away from the practice might be
fun, and excused on the premise of "giving back to the profession", but long absences can be an unforeseen impediment to eventual
sale at a desirable price. Balance your work and personal life. Be attentive to a significant financial investment.
Don't ever underestimate hidden agendas, but try to guess what they might be. No matter how well you've planned things out,
consulted with professionals, communicated prudently and carefully, and been attentive to practice operations, Murphy's Law
will come to operate. Hey, you are dealing with emotional human beings, not routine surgical procedure certitude.
A practice's culture takes years to ferment. Implementing overnight change of practice philosophy and goals without significant
trauma to the practice's economic structure is impossible. The devotion to employee training, appropriate fee structure, business
systems and internal controls, client base type and renewal, medical and surgical care standards, client communications, and
overall practice leadership must evolve through years of commitment and tending. Massive changes in a short time to maximize
practice value are fraught with difficulty. Immediate, drastic changes after acquisition can result in financial failure.
Here is an overriding, easy checklist for improving the economics of your practice-succession plan. Always ask:
- If I do this, will it make my practice attractive to another practitioner?
- If I was investigating this practice for purchase by my son or daughter, would I whole-heartedly recommend its purchase?
- Are all the protocols, policies and documents in place that show near 100 percent of good will can be delivered to a purchaser?
- Would I be proud and unashamed to open up all the details of my patient records, financial records and personal conduct to
any outside party?
As a potential purchaser, reverse the above questions, and ask these:
- Is this practice worth acquiring?
- Will it require complete retooling?
- Can the good will be delivered on sale?
Thoughtful response to these questions can help in day-to-day management decisions throughout the practice life cycle.
Be aware that all legal entanglements of the practice have a bearing on its economic reality. Be sure to a review and amend
all contracts and documents linked to the practice's operations. Competent advisors and appraisers will seek this information
and encourage the formality of it. Employee agreements, leases for real estate and equipment, compensation packages, retirement
plan obligations and shareholder/member/partner agreements are primary candidates for ongoing review in accord with current
practice operations and owner goals.
As a final thought, consider arranging periodic re-valuations of the practice by a professional. Depending on the particular
circumstances, annual, bi-annual, or tri-annual valuations might be appropriate. Talk with your accountant and attorney about
when it would be appropriate to obtain updated valuations. For management purposes, an estimation of worth every-other year
might be all you require. That way, you have updated knowledge about the potentially most-valuable asset in your investment
portfolio, your veterinary practice.