Buyers are compelled to use due diligence in evaluating and investigating the practice prior to finalizing the purchase. You can prepare for this so that all documents and information required by veterinary practice brokers the proposed purchaser are updated and ready to go as soon as the LOI is finalized. In addition to items referenced in the LOI, have these documents ready and expect the buyer to request them.
All financial statements. This includes tax returns, profit and loss statements, and documentation of the gross revenue. Gross revenue is often the most important factor to buyers who want verification for what they are actually buying. Also, have bank statements and any other relevant financial documents ready to share.
List of all liabilities. Buyers want to know what to expect. Include any current litigation or past litigation. Include how these liabilities will be handled with a sale.
Corporate documents if relevant. If your practice is incorporated, you need to provide the buyer all relevant documents including the Articles of Incorporation and minutes of all meetings. Include any upcoming dates when new filings may be due, or when corporate meeting dates need to be scheduled.
Employee information. Provide the names of all employees, their salaries, benefits, and their job descriptions. Identify key employees that are needed to keep the practice running at “top speed.” Will employees be terminated and re-hired at the closing? How will vacation and other benefits accrued under the seller be addressed by the buyer?
Is there an employee handbook? If so, the buyer should be given one. You may want to discuss the buyer’s employer/employee philosophy to be sure you are on the same page about valuing your employees.
List of equipment. This list of all equipment included in the purchase price should be itemized. The list should include the model and serial number of each item and its current condition.
Avoid entering into any new equipment leases or purchasing any new equipment as you plan for the sale. If an improvement or upgrade makes sense and will enhance the value of the practice, then do so. In general, these types of investments done just prior to a sale do not increase the value of the practice.
Vendor contracts. Provide a list of all vendors and copies of the contracts. Highlight any contracts that may need updating after the expected date the sale will become final.
Copy of all leases. Have copies of all leases ready for the buyer. This includes the lease for the office or veterinary hospital that houses the practice that is being sold as well as copies of all equipment or instrument leases.
Provide information about whether the lease for the practice facility is renewable and transferable. Know what the landlord expects of the new owner and whether there are any changes to the lease that will be expected.
Intellectual property. This includes logos, trademarks, the innovative name you created for your practice, a new way of providing treatment or performing procedures, and more. Determine which of these, if all, are included in the sale and which intellectual property you want to keep for yourself.
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