The Market & Values

Selling your veterinary practice will probably be the biggest transaction you will ever undertake, so it is vital to get a feel of its value and an understanding of how you will progress the sale before moving forward.

Who are the potential buyers and what are they looking for?

Potential Buyers-

  1. Corporate buyers
  2. Private equity group buyers
  3. Privately owner practices
  4. Individual buyers, Vets, and nurses
Their needs and how much they will pay can be very different.

How should you sell your practice?

  • 1. Just sit and wait for a corporate to come knocking- once they have seen your latest accounts, if they are interested, they will make you a provisional offer.
  • Positives - You can then just let them do all of the hard work
  • Negatives- You could lose control of managing the deal.
  • Negatives- You may not get the best price that they or another interested party would pay.
Costs- No agency fees, but you may have lost a lot more if you do not know what the market pays, your legal fees may be increased if you have not prepared a sales memorandum which should contain a lot of factual financial and non-factual information. It would help if you still worked with your accountant on the deal.
  • 2. Use an agency- a lot of these are accountancy firms with experience in commercial sales, their level of veterinary experience may be limited. The ones with experience should know the market, Costs. Usually, a % of the attained sale price of the goodwill or total sales price. E.g. 2- 10% . On a 1.5M sale you could be paying your agent between £30k-£150K
  • 3. Sell the practice yourself – Obtain a Goodwill valuation and undertake to gather all the essential background information. Then work with an experienced accountant to check and finalise the numbers. Costs. Probably under £5k-£10k
  • I had seen practices in a competitive situation sell for over £2m when the original offers from a potential buyer were just over £1m

Once you have your target price and decide how to market the practice, you must present it in the best possible way. It would be best if you produced a Sales memorandum which should show everything about the practice. The interested party should not have to ask any detailed questions because everything should be in there.

We offer sample Sales Memorandum and Flyer to help you, with every multiple report package FOC

Factors involved in determining a practices value.

Quantitative Factors

  • Historical and projected financial performance
  • Strong financials --Turnover to Profit Ratio - 17.5% ->20%
  • The current maintainable profit
  • Maintainable earnings multiples from previous purchases/sales
  • Income arrived from third party service suppliers. (e.g. laboratory tests)
  • Potential for improved performance

Qualitative Factors

  • Quality and accuracy of the sales information memorandum
  • Practice location and demographics (income/pet ownership, attractive to potential staff)
  • Management systems and staff quality and stability
  • Level of competition
  • Type and size of practice-Small animal practices are still the preferred option for buyers
  • Secure property occupancy and market rental values.
  • OOH cover
  • Dependency upon retaining owner
  • Part of buying group
  • Practice standards scheme