Financial moves to make before you hang up the stethoscope

For many California veterinarians, the practice isn’t just where you work; it’s a significant non-liquid asset. While effective exits are often the result of planning that begins years—even decades—in advance, the 60-month mark can represent a critical transition. As any surgeon knows, the success of a procedure is often influenced by the preparation before the first incision.

If you haven't started your formal financial planning yet, the five-year mark is your "Red Zone." This is the window where you still can have time to influence the value of your practice and your personal tax liability. Here is a chronological roadmap to help you work toward exiting on your own terms.

Month 60 to 48: The structural audit

If you haven't already begun optimizing your business structure, this is the time to look at your practice through the eyes of a buyer. Five years out is often a final opportunity to adjust habits that could otherwise affect your valuation.

• Clean up the balance sheet: Personal expenses running through the business need to be clearly documented. If you can’t prove an expense was personal, a buyer may not add it back to your EBITDA ((Earnings Before Interest, Taxes, Depreciation, and Amortization), which could lower your sale price.
• The 401(k) tune-up: Work toward making your retirement plan Safe Harbor. This allows you and your high-earning associates to contribute to the plan without failing non-discrimination testing. A compliant, low-cost plan is an asset during due diligence.
• Evaluate your lease: If you don't own your building, check how many years are left on the lease. A buyer may struggle to get SBA (Small Business Administration) financing if the lease term is shorter than the loan term (usually 10 years). Renegotiate now to help avoid hurdles later.

Month 48 to 24: Catch-up power

Now that the business structure is leaning out, it’s time to help grow your personal liquid wealth. If you haven't been increasing your savings up to this point, these months are your chance to accelerate your efforts.

• Utilize cash balance plans: If your practice is profitable, a Cash Balance Plan (often called a Defined Benefit plan) can allow you to set aside additional funds annually, depending on your age. These are significant tax deductions that can help lower your current CA tax bracket while building your nest egg.
• The associate retention strategy: Your practice value is often tied to production. If you plan to scale back your hours, you need a plan for an associate to keep production levels steady. Consider tiered vesting in the 401(k) to encourage them to stay during a transition.

Month 24 to 12: The tax strategy pivot

In California, the exit tax is a combination of state and federal hits that can impact your proceeds. Ideally, tax planning has been an ongoing conversation, but these 12 months are for final execution.

• Determine your number: Work with a financial advisor to run a Monte Carlo simulation. This helps determine if your projected sale price, plus your 401(k) and personal investments, can support your lifestyle for 30+ years.
• Address phantom income: If you are an S-Corp or LLC, be wary of how a sale is structured (Asset vs. Stock sale). A poorly structured asset sale can lead to significant taxation.

The final 12 months: The emotional and legal handover

The final year is about the transition that helps protect the hard assets.

• Lifestyle design: What are you retiring to? Start "trial retiring" by taking longer vacations to see how your staff and your personal routine handle your absence.
• Final due diligence prep: Gather three years of CPA-reviewed tax returns, your 401(k) summary plan descriptions, and employee contracts.
• The tail coverage: Help confirm your malpractice tail is funded and your disability insurance is reviewed if the own-occupation protection is no longer needed.

The bottom line

A great time to start planning for your exit was the day you started your practice; another opportunity is today. Taking action now can help move you from being a seller-in-distress to a seller-in-control. You’ve spent your career caring for others; it's time to prioritize the work that cares for your future self.