To merge—or not to merge

To merge—or not to merge

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Jul 01, 2006

What are the possible pros and cons of merging two practices?

"Theoretically, mergers make sense," says Lorraine Monheiser List, CPA, MEd, a consultant with Summit Veterinary Advisors, LLC, in Littleton, Colo. "There are several pros that are largely financial. Yet cons, mainly related to staffing issues, deter some owners." Here's more:

Pros

  • Lower costs because you can remove duplication of basic equipment and supplies. You could also see price breaks when buying drugs and supplies in larger quantities.
  • Access to better technology. Merged practices can afford to buy—and share—expensive lab or diagnostic equipment.
  • Efficient use of space. If one practice has excess space, merging with a practice that needs space can offset the cost of maintenance. If both are squeezed tight, moving into a larger facility together is less risky than either doing it alone.
  • Reduced need for relief veterinarians.
  • Competitors become compatriots and can offer higher quality services at higher prices.


Lorraine Monheiser List
Cons
  • Owners must share control which might be difficult for independent-minded practitioners.
  • Change is hard. Without good planning and effective communication, team members can feel threatened or fearful during the transition.
  • Consolidation. If each practice has a manager, head technician, or receptionist, will the merged practice need both? Who stays and who goes?
  • Mergers can be expensive. Determining the relative value of the practices requires two separate valuations. Plus, you must have well-drafted legal documents.
  • Practice cultures vary. If one owner maintains tight control while the other delegates, then the merged team members may have different expectations.

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