How to sell my veterinary practice?
You might be wondering:
– How much do veterinary clinics sell for?
– How do I determine an asking price to sell a veterinary practice?
– How do I find potential buyers to sell my veterinary clinic?
– How do I sell my veterinary practice through a broker?
On the last question: Use a broker when you only need a connection to a buyer (i.e. when selling real estate or stocks). Instead, use an M&A advisor when selling your veterinary practice because what you need is vastly more complex. Details on that and more answers are ahead.
Think Years, Not Months
If you’re wondering how to sell a veterinary practice and walk away after closing, it isn’t possible.
Much of the value of a veterinary practice is tied to its owners — to their expertise, reputation, and relationships. In most successful sales, that value is transferred to a buyer over a multi-year transition during which the seller works 2 to 35 hours per week. The seller should have a sales- or profit-sharing incentive to complete an effective transition. Consequently, most veterinary clinics cannot simply be sold for just a fixed payment at closing. This is especially true for selling a small veterinary practice. It applies to all veterinary practices and clinics to varying degrees, and largely depending on clinic size.
Seller Beware: Protect Yourself
Because selling veterinary practices entails sharing sales or profit with a buyer you have just met, you need protection. We recommend the following:
(1) List the adverse outcomes that can occur. For each, design a resolution mechanism that protects your assets.
(2) List the possible disputes that can arise between you and your buyer. For each, implement a binding procedure for resolving the dispute fairly and at a low cost, ideally without involving courts or lawyers.
Deep expertise in designing protection mechanisms matters. (Hint: We are exceptional at it.) Lawyers will draft the legal language that implements protections in a contract, but only a capable advisor can design protection mechanisms. Proper protection design requires economics and finance expertise, not legal expertise.
Sell by Auction or Not?
You might be seeking exit strategies for veterinary clinics .
Did you know you can sell your veterinary clinic via an auction? If you are like other vets and have a strong preference for orderliness, then an auction can be perfect for you.
The first step in selling a veterinary clinic is selecting one of two sale mechanisms:
Option 1: Auction Mechanism
If you wonder “how do I sell my veterinary practice for maximum price,” look here:
There are several differences between the auctions we see in movies and an auction mechanism for selling veterinary practices. Here are a couple:
(1) Bids will entail several numbers in addition to purchase price. For example, the percent of the price paid through a multi-year seller note and your compensation during the transition period are two other numbers that could be included in a bid.
(2) The winning bidder will be selected based on a valuation formula that calculates how much each bid is worth to you, so you know when you should sell your veterinary practice.
(3) The bidders will not be aware of each other’s bids.
What are the benefits if I want to sell my veterinary practice via auction?
(1) If we have at least two bidders, then an auction will generate more value for you than an ad hoc mechanism. This is how to sell a veterinary clinic for a maximum price.
(2) The business is more likely to end up in the hands of the right person.
(3) The high amount of structure required for an auction forces everyone to produce and act upon a high degree of clarity early in the process. This reduces the likelihood of the deal falling through late in the process.
What are the disadvantages if I sell my veterinary practice via auction?
(1) There is somewhat more work to do upfront: (a) Closing documents need to be generated upfront rather than late in the process. (b) We need to decide upfront on precisely how you would value different possible deal structures.
(2) You have less flexibility. Once you have executed an auction agreement with the prospective acquirers, you cannot back out of it.
Option 2: Ad Hoc Mechanism
If you’re thinking, “I want to sell my veterinary practice the old fashioned way, and an auction sounds too complex,” look here:
In this mechanism, we negotiate with each prospective buyer one-on-one. If you like what someone offers, you move forward with them. If you are uncertain about their offer, we ask them to wait until we have more offers.
What are the benefits of selling my veterinary practice via ad hoc mechanism?
(1) Less work is required before engaging prospective buyers.
(2) You commit practically nothing to the acquirer until final closing documents are signed, which is relatively late in the process. This implies that you are free to change your mind until then.
What are the disadvantages if I sell my veterinary clinic this way?
(1) If you ask a prospective buyer to wait until you have fielded more offers, you risk losing them because they might find another opportunity.
(2) The best prospective buyer might drive a hard bargain, offering too little. A less qualified prospective buyer might not drive such a hard bargain. As a result, you might go forward with the less qualified buyer. It is important that we find the best buyer because everyone wins when that is the case.
(3) Because this is a less structured process, with less agreed upon upfront, it is more likely that the deal will fall apart after a non-binding offer is accepted. This can result in significant lost time, money, and energy.
Optimal Deal Structure
If an owner commanded, “Sell my veterinary practice for the highest possible price!” then I would say, “Be careful what you wish for. You probably wouldn’t sell at a price of $10 million paid over 100 years with a 0.1% interest rate.”
The correct mandate is, “Sell my veterinary clinic under a deal structure that maximizes the net present value of my future cash flows, considering expected and worst case scenarios, and that allows me to exit comfortably on my realistic timeline.”
Deal structure is the set of terms in your sale contract that affect the timing, contingencies, and amount of payments you receive.
In the veterinary industry, successful firms have long-term clients for which they perform annual services related to audits, taxes, and financial reporting. It can be sensible for some of your payment to be tied to the retention of these long-term clients.
If you are open to a broader array of deal terms, you will have a larger pool of prospective acquirers. That translates to extracting more value out of your firm. For example, if a handful of veterinary clients comprise a large portion of your services revenue, then it will be difficult to attract buyers without tying part of your sale price to the retention of those big clients.
How much do veterinary practices sell for?
The deal structure is equally as important as the purchase price. If you want to sell your veterinary clinic, you can value it in two ways:
(1) Discounted cash flow method. We will analyze your current client relationships and marketing mechanisms. Based on that, we will project your revenue in future years under a best case, worst case, and expected case scenario. We will project your costs and expenses given their current levels. This will allow us to project your firm’s operating cash flows under each scenario. We will then sum up the values of each future year’s operating cash flow, discounting it by dividing it by (1+r)^number of years in the future. We will determine the value of r by analyzing the volatility of your historic cash flows relative to historic stock market performance.
(2) Comparables method. We have data on past sales of veterinary clinics. Using comparable sales data, we will infer the value of your firm. For example, we know that the median veterinary firm sold for 2.57 times the seller’s discretionary earnings. That is low. Using the optimal deal structure and selling mechanism, we can achieve a higher valuation than that. If you are still wondering, ‘’Should I sell my veterinary practice’’, then our approach will most likely remove all doubts.
What are the steps to sell my veterinary clinic?
Several of these steps occur in parallel:
(1) Consultation. If you contact us at sell@nextbridgeadvisors.com or 407-256-1482, we will provide more information tailored to your veterinary practice regarding everything on this page. From this conversation, you will understand your options.
(2) Valuation. We will conduct a valuation by the above methods. If you wish to sell your veterinary clinic via an auction mechanism, we will develop a model enabling us to value every acceptable deal structure.
(3) Materials Preparation. We will prepare a 50-page memorandum, 2-pager, and brief messaging that we will use to convey the opportunity of buying your veterinary business. If you wish to sell via auction, we will work with our economical attorney or yours to develop the auction and closing documents.
(4) Targeting. We will determine the criteria for the companies and individuals that would be suitable acquirers of your veterinary practice. Criteria can involve size, geography, specialty, years of experience, and more.
(5) Outreach. We will contact buyers in several different ways, including contacting some of the 28,000 buyers in our network, sending direct messages to other individuals and companies who meet your criteria, and online advertisement on business for sale websites and professional job boards. We will only introduce you to the most qualified prospects.
(6) Negotiation. We receive offers, improve them, and work to pick the best one. If we are using an auction, negotiation is automatic.
(7) Due Diligence and Closing. The winning bidder conducts due diligence on your veterinary practice. If we are using an ad hoc mechanism, then in parallel their attorney produces closing documents. Once all of that is concluded, the deal is closed.
(8) Post-Closing. We will be available to help make your business sale successful. We can create accounting dashboards that calculate the payments you are owed. We are also available to act as administrators in any dispute resolution process described under the “Seller Beware: Protect Yourself” section.
Examples of veterinary practice listings
For you to get a sense of what is on the market, here are some recent listings:
Asking Price: N/A
Cash Flow: $403,994
Price Multiple: N/A
Revenue: $1,080,767
Employees: 0
Small Animal Veterinary Practice for Sale in Charming Area of South Central Pennsylvania – Partial Seller Financing Available!
Asking Price: N/A
Cash Flow: $294,616
Price Multiple: N/A
Revenue: $671,382
Employees: 0
Small Animal Veterinary Practices for Sale in Southern West Virginia – Dual Practice Opportunity!
Asking Price: $295,000
Cash Flow: $300,000
Price Multiple: 1.0
Revenue: $300,001
Employees: 0
This small animal practice offers an exceedingly rare opportunity to work away from the city life and in a quiet rural community just North of Tampa. Solo doctor practice has “the reigns” on servicing families in the immediate zip code and beyond. This practice was opened in 2018 under the direction of Dr. Faith Riley, who will be relocating out west after the sale of the practice so she can live her dream within a ranch and equine life.
Asking Price: $800,000
Cash Flow: $248,116
Price Multiple: 3.2
Revenue: $758,767
Employees: 5
The Practice is a very well established, working, extremely reputable Veterinary practice. It is located in the heart of Southern California
Asking Price: $495,000
Cash Flow: N/A
Price Multiple: N/A
Revenue: N/A
Employees: 0
Ready for a turn-key opportunity? Well established veterinary practice since 1980 for sale in the heart of Barton Village on a busy side street. Large clientele base for small animals (dogs/cats). Includes main building with live-in quarters upstairs (4 bedrooms and 1 full bath), practice downstairs with exam room,operating room, x-ray room, office, 1/2 bath, kitchen space, and retail showroom/lobby. Walkout basement with kennels and storage, even a dark room. Mostly finished attic with additional storage rooms. Out back is a barn/2 car garage with 1 horse stall and storage above, crematory and workshop, and equipment shed. 4.75 acres of level agricultural-grade land that is pesticide free and has a large raspberry garden.
Asking Price: $475,000
Cash Flow: N/A
Price Multiple: N/A
Revenue: $190,000
Employees: 5
Mixed animal veterinary practice in the beautiful western Piedmont of North Carolina.
Asking Price: $975,000
Cash Flow: $342,100
Price Multiple: 2.9
Revenue: $995,000
Employees: 0
This Kings County Practice GROSS 1MM is prime for a 2 doctor operation in this fast paced Brooklyn busy community. Currently the Practice is run- 6 Days 1.5 Docs, 2 techs, office staff fully turn key! ( 1 OPERATING ROOM- 2 EXAM ROOMS- 1 XRAY ROOM- WAITING ROOM- OFFICE RECEPTION FULL CAMERA Ample 2200 Sq over 2200 sq basement fully built out for boarding and grooming but the space is underutilized.
Asking Price: $180,000
Cash Flow:N/A
Price Multiple: N/A
Revenue: N/A
Employees: 4
This small animal practice offers an exceedingly rare opportunity to work away from the city life and in a quiet rural community just North of Tampa. Solo doctor practice has “the reigns” on servicing families in the immediate zip code and beyond. This practice was opened in 2018 under the direction of Dr. Faith Riley, who will be relocating out west after the sale of the practice so she can live her dream within a ranch and equine life.
Asking Price: $250,000
Cash Flow:$50,000
Price Multiple: 5.0
Revenue: $186,000
Employees: 2
Established and locally owned. Nebraska’s Only Total End of Life Care Center for Pets. We have Pioneered In Home Pet Hospice, In Home Euthanasia and have the States only True Pet Funeral Home. Leading and changing the way pets and the families that love them are handled at the end of a pet’s life. We are known for our compassionate care, integrity, and transparency.
Asking Price: $130,000
Cash Flow: $226,657
Price Multiple: 0.6
Revenue: N/A
Employees: 2
Long established 50 -year veterinary hospital & services business for small animals in North Monterey County. It services four counties. The veterinarian owner is ready to retire after 36 years. He is working half-time for the last 8years & his financials reflect this. The 1,659 sq.ft. the building has two exam rooms, a treatment room, a surgery/dental room, and a receptionist/waiting room.
Asking Price: $395,000
Cash Flow: $135,000
Price Multiple: 2.9
Revenue: N/A
Employees: 5
The small animal veterinary clinic is located in a well-established and affluent area of Lee County. The veterinarian is retiring and the business has been SBA Lender Pre-Qualified. It has been in business for over 30 years in the same location and has a loyal client base. The owner states they work approximately 20 years a week.
Asking Price: $1,750,000
Cash Flow: $560,000
Price Multiple: 3.1
Revenue: $1,640,127
Employees: 10
The SOLO VETERINARY Clinic, located on the west gulf coast of Florida, is well established and has a loyal client following with long term repeat customers. The clinic offers wellness exams, diagnostic imaging, cardiology & surgery services, hospitalization, internal medicine, dentistry, vaccinations, boarding and health supplies. The clinic is highly rated and has won numerous consumer awards.
Asking Price: $475,000
Cash Flow: $137,740
Price Multiple: 3.4
Revenue: $421,261
Employees: 5
Medical services provided include exams, vaccinations, digital x-rays, fluid therapy, full pharmacy, prescription diets, microchipping, heartworm and lyme testing, in-house laboratory with Abaxis equipment for CBC, urinalysis, complete chemistries, microscope, clotting times. Euthanasia and house calls as requested are also provided. Canine and feline dental scaling and polishing, extractions.
We make selling veterinary practices easy and lucrative
At Next Bridge Advisors, we sell veterinary practices and other professional services firms anywhere in the United States.
Having been established for 13 years, we have built a network of 28,000 buyers and a unique combination of expertise in the finance, marketing, structuring, and dispute prevention aspects of business sales.
Email us at sell@nextbridgeadvisors.com or learn how to maximize your earnings from selling an accountancy practice