There are many things to think about when it comes to selling your veterinary practice. The main steps in the process are set out below…
You need to find a buyer and agree a deal price and structure. This may involve some initial information sharing where a confidentiality agreement (also known as a non-disclosure agreement) is sometimes helpful. You will also be expected to sign a Heads of Terms or Memorandum of Sale. Although this document is usually expressed to be not legally binding, it sets out the expectations of each party in relation to the deal and so it pays when selling your vet business to use a vet solicitor specialist to prepare this. For example, if you can avoid or limit post-completion earn out payments at this stage that should be welcomed. Make sure you appoint or at least talk to a solicitor before you sign even a non-binding heads of terms or memo of sale.
Due diligence – this is the investigatory stage of the process where the buyer seeks to establish what it is he or she is buying. Astute veterinary practice sellers will work closely with their legal advisors at this stage to package the business data and documentation – warts and all – in their best light and if appropriate to release sensitive information only at later stages.
Full disclosure should be the aim but an experienced solicitor will manage this process efficiently and to your advantage. At Truelegal we use virtual datarooms for due diligence which greatly enhances speed, transparency, efficiency and traceability. It makes your life easier, allowing you to quickly access and share important information with the buyer.
In any vet sale, the Share Sale Agreement or Business Purchase Agreement is the key document, together with the related Disclosure Letter. Often the agreements will run to 50 pages or so with half of the document dedicated to warranties and indemnities which you as seller will be asked to give.
These are complex documents and it is essential you understand what you are agreeing to or you could find yourself the subject of a warranty claim a year after completion. This can and should be avoided by proper disclosure of all aspects of your vet business by using a solicitor experienced in reviewing warranties.
Alongside the main agreements there will be other issues where advice is required. A prime example is dealing with employed and locum staff. Where you are selling the business goodwill (rather than shares) you will need to become very familiar with TUPE legislation which has a number of pitfalls for ill-advised sellers.
Another area that can cause issues when selling a veterinary practice is the process of getting consent from third parties such as landlords, finance companies or banks to the sale of the business and the associated property leases, equipment leases or bank loans and overdrafts. Sellers commonly underestimate how long this process can take. Approaching such third parties at an early stage in the proceedings is key to a smooth transfer and we can help you with that.
If you are staying on in the business after the sale – which is quite common, at least on a transitional basis – we can assist you with the negotiation of the employment or consultancy agreement negotiating appropriate commercial terms.
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The sooner we become involved in the process of helping you to sell your veterinary practice the more likely it is that your sale will be successful, so please contact us today.
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