"A Dollar Saved is a Dollar Earned." We have all heard this old saying and in some cases it may be true. However, when it comes to saving money by forgoing professional advice, sometimes the money saved will lead to substantially greater cost!
Consider the client who refuses to come in and have their sick animal seen by a veterinarian because they don't want to pay for an exam. Instead, they obtain free consultations from their friends, their breeder, Dr. Google, or other "knowledgeable sources." Anything to save the expense of a veterinary visit! And honestly, they may not understand that their pet's condition may be nothing like what their friend's pet had.
How many times do those animals ultimately end up being seen by the veterinarian after any number of home remedies have been tried, only to have a much more extensive and expensive workup due to the advanced nature of the disease? If these penny-pinching clients had simply come in for a professional consultation earlier in the course of their pet's illness, they likely would have saved money and had a much better prognosis. I think we can agree that the initial "dollar saved" ended up being a lot more "dollars spent" in the long run.
As veterinary providers, you understand the need to get quality care rather than cutting corners. You realize that money invested now can prevent a larger amount of money being spent later. You also understand how careful you need to be when giving out free advice over the phone, because you cannot adequately evaluate an animal's health without begin able to assess that animal directly.
Why is it, then, that these same professionals who understand the perils of cutting financial corners will cut corners themselves when it comes to seeking out qualified, professional advisors to help them with practice sales/acquisitions or other significant financial transactions?
Far too often, we have seen veterinarians purchase practices without having used their own, independent advisor to help them assess the reasonableness of the purchase price. In many cases, the seller's advisor has prepared a "practice profile" which the buyer mistakes for a true unbiased business appraisal. Unfortunately, without an independent assessment of value or an advocate to work on their behalf, these veterinarians often overpay for their practices and in some cases, dramatically so. In one case, we were able to identify an unreasonable adjustment that over-valued the practice by more than one million dollars! Imagine the financial consequences to the buyer if they had chosen not to hire their own advisor and had instead decided to trust the seller's advisor or a neighbor or brother-in-law. Sure, they would have saved a few thousand dollars. However, that "money saved" would have ended up costing the buyer a substantial amount of money!
Certified appraisers who are engaging in business appraisal are bound by a code of ethics to provide an unbiased opinion of value. However, the vast majorities of "price setting" engagements in the veterinary industry are not true appraisals and are not held to these ethical standards. In many cases, the seller's advisor is working from a position of advocacy, and in some cases, their compensation will be determined by the sale price. In these cases, the higher the price they can justify, the better-for them, not for you. Therefore, it is always worth the money to have your own advisor who can determine whether the asking price is fair.
Unlike appraisers, who are supposed to be independent and unbiased, attorneys are hired to be advocates for their clients. Any time you are entering into a legal agreement, whether it be a practice purchase, a partnership agreement or even an employment contract, it is crucial to have your own attorney to represent your interests. Avoid the temptation to save money and "trust" that all will be fair and that your interests will be appropriately represented, no matter how well you know or trust the other parties involved.
We realize the potential fees from lawyers, accountants, appraisers, financial consultants or other advisors can be daunting. Remember though, money spent now can often prevent a much greater expenditure (or legal action) later. When you choose a consultant or advisor, their fees are an important factor to consider. Compare the fees with the services you will receive in exchange. Particularly when you are doing something complex that you haven't done before, such as buying a practice or adding a partner to your business, hire an expert to help you understand the process and make sure all the details are addressed. Also consider how long it would take you to research the topic fully and the value of your time. As a veterinarian, your time is best spent seeing patients and generating revenue for the practice, not researching federal partnership rules or state sales tax laws.
Although every situation is different, when it comes to practice acquisitions/sales, there are often hundreds of thousands or even millions of dollars on the line. Good advice isn't necessarily cheap but bad advice is always costly. Spending a few thousand for high quality advice is money well spent indeed!