Veterinary Practice Transition & Appraisal Specialists
Pacific Professionals, Inc.
Buying a Practice
Click to download Buyer Packet
Historically, most sellers would carry back a note on the practice and/or real estate,
and would generally require a 20% cash down payment. However, some sellers,
because of capital gains taxes, plans to complete a 1031 real estate exchange, equity
positions, closing costs and other liabilities, would require more cash down. Currently,
unless the seller is completing an internal sale to an associate, the majority of the time
sellers want to be cashed out entirely. In these circumstances we would look to
commercial financing of the assets of the practice to assist the buyer in acquiring an
entire financial package including essentially all of the purchase price plus additional
working capital. The good news is that with our aggressive commercial lenders, most
practices can be purchased with a minimal or no down payment, provided the doctor
has good credit.
Lenders do require a minimum of ten to twenty percent down payment for the
purchase of real estate. However, one protocol we frequently utilize is to obtain a
conventional loan for the purchase of the real estate, which finances the real estate
with minimal buyer funds, if the seller is willing to carry a second deed of trust. The
actual down payment required for the total project is determined by which programs
we use, your ability to qualify for certain programs, and the seller’s willingness to carry
a second deed of trust. A major factor important to lenders is your personal monthly
overhead.
When considering the purchase of a veterinary practice, one of the most important
items to consider is the cash flow. In profitable practices, we expect the practice to
have enough cash flow to cover a reasonable salary for the new owner and the new
debt service created through the transaction. There are four major parameters in each
transaction. They are the price, the down payment, the terms of the new practice note,
and the monthly lease or mortgage for the building and the land.
| We Close Over 95% Of Our Escrows |
| Pacific Professionals, Inc • (805) 524-3195 • Fax: (805) 524-3192 • pacproinc@aol.com |
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