When a principal vet is ready to retire or move on to a different venture, there are various strategies that can pave the way to passing your practice on. Kerryn Ramsey reports.
Your vet practice is the financial vehicle that has carried you through the past 15, 20 or 30 years but now you’re thinking about letting it go. Maybe the lure of retirement is calling or perhaps you’re ready to undertake a new endeavour—either way, preparation is important for a smooth transition.
Obviously, it’s about handing over to the right successor for the right price, but there are some other issues to be considered. Is it time to bring in a partner who can eventually take over the whole practice? Is it easier to sell the practice to a corporation? Can the retiring vet still work for a set number of days once the practice is sold? By sorting out these issues in advance, the process of letting go can actually be an enjoyable experience.
It might be necessary to spend money before the practice can be considered market ready. To attract buyers and maximise the selling price, the premises may require a few improvements. These can range from a fresh lick of paint to brand-new equipment.
According to Jon Shell, chair of VetPartners, now is a great time for large practices—those with three or more full-time vets and more than $1m in turnover—to consider their options.
“The value of a practice is at a high level at the moment, whether you own the property or have a long-term lease,” he says. This is mainly due to the expansion of corporate veterinary practices, such as the very successful Greencross and new kids on the block, VetPartners, National Veterinary Care (NVC) and other smaller corporations.
Shell admits that while most vets looking at retiring would rather have a more traditional exit—passing the business over to a dedicated assistant—this situation isn’t always possible. On the other hand, Shell makes the point that selling to a corporate group is usually “smooth and generally painless.”
Dr Charles Foster found this was the case when he and his partners’ eight practices in Victoria were purchased by NVC last August. The whole process was completed within three months.
Dr Foster purchased his first practice, Blackburn Vet Centre, in 1997, and the business grew exponentially, with another seven practices eventually opening in the region. Over the years, Dr Foster and his partners had received various offers from corporates but had turned them all down.
“The value of a veterinary practice is at a high level at the moment, whether you own the property or have a long-term lease ” – Jon Shell, chair of Vet Partners
“We’d been courted by others for quite a few years, and we were either not interested in their offers or it wasn’t the right time,” he recalls. “The offer from NVC came at just the right moment and met all our needs.”
After signing on the dotted line, some partners were happy to sell, while other younger vets decided to stay on as joint-venture partners.
“It’s quite a big decision, when you’ve got that many people around the table, and multiple businesses,” says 52-year-old Dr Foster, who is 10 years older than some of his ex-partners. “It meant that the younger partners could clear their house mortgages and other debts. It’s a nice thing when you have a young family to be suddenly debt free.”
Dr Foster decided to stay on with NVC, taking on a corporate role—general manager of operations. “I was familiar with the corporate world because of working with suppliers and other roles in my past,” he says. “It’s a new, young company, and it allows us to do bigger, exciting projects.”
While Dr Foster has happily gone in a new direction, many baby boomer vets prefer to disengage slowly from their practice rather than just quitting cold turkey. Dropping from full-time employment to a part-time position can make the process less stressful for all concerned. The principal vet has a chance to become accustomed to the retirement lifestyle while an associate vet can gradually take over.
Dr Harley Maxwell has already put together a plan for a peaceful wind down. He’s been the practice owner of Corio and Lara Veterinary Clinics in Geelong, Victoria, since 1983.
“When I put together my five-year plan, I was hoping an associate would eventually take over. For a variety of reasons, this hasn’t been the case. I decided to sell to VetPartners, but I love practicing, so my retirement is still a long way ahead.” When the time to disengage eventually happens, there are provisions in place to make the transition as easy as possible.
Dr Maxwell has an agreement to work full-time for a two-year period, but the job is open ended.
Transition to retirement is undoubtedly a complex journey. According to Michael Quirk, CEO of VetPartners, when a practice is purchased by VetPartners, the owner-vet generally doesn’t leave the practice. “One of our main selling features is that you can stay at your practice until you want to retire, without needing to worry about a succession plan.”
Dr Maxwell says that he’s attracted to this concept. “From my point of view, I wanted to stay involved in a smaller capacity after selling up. Eventually, I intend to work part-time or as a locum while others are on leave. I’ll probably enjoy work even more, particularly interacting with staff and clients, when I’m not running the business.
“I’m also looking at voluntary social work but I really want to stay active at what I have been doing for all of my working life—being a veterinarian.”