Funding the buyout of a veterinary practice

By Richard Mitchell
Content writer
Last update: 3 October 20231 minute read
Funding the buyout of a veterinary practice

Buying the practice you work in

A veterinary assistant found his lack of business experience running a practice made lenders wary in an already delicate post-Covid climate but Rangewell successfully arranged Management Buyout Funding to the value of £800,000. 

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At Rangewell, we were recently approached by a vet who had their business plans severely disrupted when Covid struck - and changed the funding landscape.

Our client was an employee of an independent veterinary practice. The owner had been approached by one of the large corporate veterinary chains who were keen to discuss a partner buyout.

He believed that if he could buy the practice himself, it could be a very sound move in his career.

“The owner felt that the price they were offering £800,000 was fair but he was sympathetic to my interest in the business, which he wanted to see remain independent if at all possible - and certainly in the hands of someone who he knew and trusted - and felt would have the best interests of patients at heart.”

He agreed to give our client time to find the necessary funding.

Is buying the practice you work in your next career step?

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Funding a Management Buy-out

A management buyout is often the preferred route for the succession of a business, allowing an experienced manager or management team to use their knowledge and giving the business the best prospects for the future. However, it is rare that a manager will have the funds without external finance to buy a company. 

It usually requires a combination of debt and equity that is derived from both the buyers, financiers and sometimes even the seller, and can be structured in a number of ways:

  • A buyer contribution – The manager will need to use personal funds as evidence of commitment to the transaction. 
  • Asset Refinance – Borrowing against the assets of the company to buy the company itself can be a particularly effective solution for those businesses with a large investment in plant and property (although this route would not be available to our vet client).
  • Business Loans – Business lenders may offer Unsecured Loans, repayable over three to five years, or a larger scale of lending and a longer-term with a Secured Loan, with the security provided by other business assets.
  • Vendor Loan – the vendor can help fund the transition by leaving some of their equity in the company as a loan, which will be repaid over time.

In the case of our client, the business had no property to act as security for the large level of funding required, and this was causing problems for potential lenders who prefer the security of business property. 

The position was made worse by the fact that the vet had no business experience, despite years of experience in practice.

Eventually, the vet found a lender who was prepared to fund the deal - but at the last moment, the Covid crisis caused the lender to rethink their position and withdraw the offer. 

The corporate buyer was still ready to take over the practice.

Realising the problem had turned into an emergency, the vet asked the Rangewell team to use their skills to find a solution - fast.

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Finding a solution

We looked at a number of solutions and saw that the scale of the challenge had been made greater by the lending landscape during Covid. Many lenders were simply not lending until the scale of the crisis could be fully understood.

However, we were able to use our network of contacts across the entire lending industry to find a lender who was prepared to offer our client the funding they needed.

We found a lender who looked at the excellent profits that the practice was making and was prepared to offer the sum required based on the figures over the last few years.

This type of practice loan can be appropriate for professional practices of many kinds, with an established client list and a record of profitability stretching back over several years.

The funding Rangewell secured

£800,000 over 15 years at 3.75% above base rate

Why you need Rangewell to find finance for your Veterinary Buy-in or Buyout

If you are ready to buy into an established practice or business, many lenders will be happy to lend. A management buy-in can be a relatively low risk, because it is based on a business that can demonstrate dependable performance, and will have the potential to do even more when the management team are also the owners.

But not all lenders will be prepared to offer you the most competitive terms or give you the flexibility that you require - and none can offer you the pick of the entire lending market to help ensure that you get the deal that's most appropriate for your particular circumstances, with the rates and terms you want.

Looking for the most competitive deal across the entire market takes time and expertise. At Rangewell, we will work to find the lenders who can offer the most competitive rates for you and we find solutions for all types of business finance and challenge you're facing.

We help source the entire range of conventional loan products, and Alternative Funding from new loan providers and styles of funding. Even more important when it is an MBI, we can work with you to tailor the kind of complicated ‘Jigsaw’ Funding plan required to support your plans.

We understand the challenges of MBIs and the solutions to them. Call us now to get our experts working to provide them for you.

Questions about Veterinary Management Buy-ins or Buyouts?

Contact us today for answers

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How can we help you?

If you are faced with a funding problem, especially if your bank cannot help provide the funds you need, the answer is simply to call us at Rangewell. We are experts in all aspect of funding for veterinary practices, and we can use our knowledge to find funding solutions - even when going direct to lenders will only mean problems.

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