The economy in the crystal ball
Despite the economic challenges of the last few years, these consultants say 2012 showed progress, and they remain optimistic
about the opportunities 2013 will bring.
"From my own perspective, it's a very interesting marketplace. We're headed into a wind stream that should bring a lot of
sellers to the table, because of all of the baby boomers retiring," Glassman says. "If we could get by some of these tentative
governmental issues going on right now in Congress, it will steady out the marketplace. We may find more sellers coming back
to the table."
Gerber agrees. "I think things are going to improve, not just in the veterinary world, but all over," he says. But as times
change, veterinarians will need to change with them. For example, savvy consumers may push for advanced technology such as
digital radiography, he says. While this can be cost-prohibitive for small one-doctor practices, it may lead to collaborative
efforts such as separate practices coming together to build a central hospital that they own and operate together.
"I worked for a practice like this out of college," Gerber says. "It was more like the human model. In that hospital, we did
all of the x-rays, all the surgeries, all emergencies and central buying of products. But it was owned by these individual
practices. And we should see more of that. It makes a ton of sense."
In fact, Gerber says, while he still sees a lot of one-doctor practices, they're becoming less and less common. And two- to
three-doctor practices are often more profitable and more efficient than giant practices. He also sees an increasing trend
of buyers buying into practices and sharing partnerships instead of buying the whole practice.
McFerson agrees that associate buy-ins are coming back. This offers advantages for both buyers and sellers, he says. It gives
sellers a chance to sell the practice over three or four years, which can improve cash flow and put them in a better position
to retire. For example, they might choose to sell 40 percent now and still own 60 percent, which would still offer the benefit
of profit from the practice for those years. It can be a good approach for buyers, too, because it decreases their risks,
allowing them to baby step into ownership with the benefit of a partner.
"The environment's pretty good," McFerson says. "Who's to say it's going to get any better? Who's to say it's going to get
any worse? It's hard to say. It just feels like the numbers are better all the way around."
McCormick says it's tricky business trying to time the market. Instead, it's better to focus on a practice's features and
understand the variables that influence how fast it will sell, including location and practice profitability. "The market
is very healthy," he says. "There are buyers out there for small practices and large practices. Just remember, national trends
are not relevant to any individual practices. You need to talk to your local broker to get an idea in your part of the state.
You should value your practice to get an idea of what kind of timeline fits your practice, so when you enact your exit, your
practice is at an appropriate value and you have the energy to keep it going. Because the buyers are there."
Portia Stewart is a freelance writer in Lenexa, Kan.