How to Buy a Veterinary Practice
Buying an established veterinary practice can provide a path to practice ownership without starting a business completely from scratch. However, purchasing a veterinary practice involves evaluating the business, understanding its financial performance, completing due diligence, and arranging appropriate financing.
For veterinarians considering veterinary practice financing, understanding the acquisition process can help prepare for the financial and operational decisions involved in becoming an owner.
Determine What Type of Practice You Want
Veterinary practices can differ significantly in size, location, services, staffing, and patient base.
Before beginning a search, veterinarians should consider the type of practice they want to own and whether they prefer a small independent practice, a larger operation, a specialty practice, or another model.
Find a Veterinary Practice for Sale
Potential buyers can find acquisition opportunities through veterinary practice brokers, professional networks, industry contacts, and other sources.
The right opportunity should fit the veterinarian’s professional goals as well as their financial capabilities.
Review the Practice’s Financial Performance
A veterinary practice’s historical financial performance is one of the most important areas to evaluate.
Buyers should review revenue, collections, expenses, profitability, payroll, and other financial information to understand how the business has performed over time.
Evaluate Patient Volume
The number and consistency of patients can provide insight into the practice’s revenue potential.
Buyers should consider both current patient volume and whether the practice has opportunities for future growth.
Review the Service Mix
Veterinary practices can offer a wide range of services, including wellness care, surgery, dentistry, diagnostics, boarding, emergency services, and other offerings.
The service mix can affect both revenue and operating expenses.
Evaluate the Facility
The physical condition and layout of the veterinary facility should be reviewed during due diligence.
Important considerations can include examination rooms, surgical areas, kennels, treatment areas, equipment, parking, accessibility, and the condition of the building.
Review Veterinary Equipment
Equipment can represent a significant portion of a practice’s value and future capital requirements.
Buyers should evaluate the age, condition, ownership status, maintenance history, and expected replacement needs of major equipment.
Evaluate the Staff
Experienced veterinary professionals and support staff can be an important part of an established practice.
Buyers should understand the existing staffing structure, compensation, benefits, turnover, and key employee responsibilities.
Understand the Seller’s Role
The current owner may play an important role in the practice’s operations.
Buyers should determine how dependent the business is on the seller and whether the seller will remain involved during a transition period.
Complete Due Diligence
Due diligence allows the buyer to investigate the business before completing the purchase.
This can include reviewing financial statements, tax returns, leases, contracts, equipment records, employee information, licenses, and other relevant documents.
Determine the Practice’s Value
The purchase price should be evaluated against the practice’s financial performance, assets, patient base, location, equipment, and other factors.
A professional valuation may help the buyer better understand whether the asking price is reasonable.
Consider Financing
Many veterinarians use financing to acquire an established practice rather than funding the entire purchase with personal savings.
Depending on the transaction, financing may potentially cover eligible acquisition costs and other expenses associated with the purchase.
Plan for Working Capital
Acquisition financing should not necessarily be the only financial consideration.
The new owner may also need working capital for payroll, supplies, marketing, repairs, equipment, and other expenses during the transition.
Review the Lease or Real Estate
If the practice operates from leased space, the buyer should carefully review the existing lease.
If the building is included in the transaction, the commercial real estate should be evaluated separately as part of the overall purchase.
Plan the Ownership Transition
A transition plan can help minimize disruption to employees, clients, referring veterinarians, and the day-to-day operation of the practice.
The seller may remain available for a defined period to help introduce the buyer and transfer operational knowledge.
Consider Future Growth
The best acquisition is not necessarily the largest practice available.
Veterinarians should consider whether the practice provides realistic opportunities for growth through additional services, increased patient capacity, new equipment, additional providers, or facility improvements.
Final Thought
Buying a veterinary practice involves much more than agreeing on a purchase price. Veterinarians should carefully evaluate the practice’s financial performance, patient base, staff, equipment, facility, liabilities, and future growth opportunities before completing an acquisition.
A detailed due diligence process and appropriate financing strategy can help a veterinarian make a more informed decision when pursuing practice ownership.
