You’ve probably noticed that the veterinary industry is shifting quickly. It seems like, out of nowhere, big companies—corporations, private equity firms, and large veterinary groups—are suddenly keen on buying up veterinary practices. You might be wondering, “What’s driving this sudden interest?”

Here’s what’s happening: Millennials have become the largest group of pet owners—76% of them, according to a YPulse survey. Since the COVID-19 lockdowns, they’ve fully embraced the joys of pet ownership, and this isn’t just a passing phase. It’s fundamentally changing how we approach veterinary care. In one of our recent webinars, a few practice owners mentioned that they are now seeing younger clients coming in more frequently, treating their pets like family, and willing to spend whatever it takes to keep them healthy. According to our senior consultant Tom, this shift has sparked a rush among big companies to get in on the action, viewing veterinary practices as a golden opportunity.

Now, if you’ve spent years building up your practice, this sudden attention from big corporations can feel like a double-edged sword. On one hand, it’s a fantastic opportunity. On the other, it can be a bit overwhelming—what’s the best move here? If selling your veterinary practice has crossed your mind, now is the time to really get a handle on what’s happening in the market and what these companies are actually offering. The landscape has changed significantly, even in just the past few years.

Let us start with looking at the dynamics of veterinary practice. 

The Dynamics of the Veterinary Market in 2024

This year, the veterinary market is being shaped by a few key trends. On the one hand, there’s been a surge in pet ownership, and people are more focused on their pets’ health and wellness than ever before. This has created a booming market for veterinary services, making practices more attractive to potential buyers.

But that’s not the whole story. On the supply side, many practice owners, especially those nearing retirement, are starting to think about selling. Let’s face it, running practice isn’t getting any easier. As a practice owner you have to manage staff, staying on top of the latest regulations, and juggling the day-to-day demands can be exhausting. And with the financial incentives currently on the table, the idea of selling becomes more appealing. Plus, with all the economic ups and downs we’ve been through lately, the stability that comes with selling to a corporation is a pretty strong draw.

Take Dr. Angie, for example. She’s been running her small animal clinic in a suburban area for over 30 years. She’s deeply connected to her clients and her community, but the growing administrative load and the prospect of a strong financial return have her seriously considering offers from corporate buyers. And she’s not alone—many practice owners are finding themselves in the same boat, weighing their options as they navigate these market changes.

What Corporations Are Paying for Veterinary Practices

In 2024, the value of a veterinary practice is typically determined by its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). It’s a common way to review a business’s profitability. Right now, corporations are paying anywhere from 8 to 13* times EBITDA for veterinary practices, but this can vary depending on several factors.

• Small Practices: If you’re running a smaller practice, especially in a rural area, you might see offers closer to 4-5 times EBITDA. These practices often struggle to attract new clients due to their location, which can limit growth potential. Imagine a small-town vet who’s been serving the same loyal clients for decades—while the relationships are strong, the growth prospects might be limited.
  
• Mid-Sized Practices: Practices with steady revenue, a loyal client base, and good profitability typically command valuations of 6-7 times EBITDA. These practices are appealing because they have a solid foundation and room for growth. For instance, a mid-sized practice that’s built strong relationships with local pet owners and offers specialized services like dental care might see a higher valuation because it’s carved out a niche in the market.
  
• Large Practices: High-revenue practices, especially those with multiple veterinarians, advanced facilities, and strong market positioning, can command offers as high as 8-13 times EBITDA. These practices are in high demand due to their scalability and the potential for a significant return on investment. Think of a large, state-of-the-art animal hospital that’s a hub in the community—no wonder corporations are lining up with top-dollar offers.

Do you know that Partnering up with Transitions Elite for selling your practice can be the best decision? Hear what Practice owners have to say:

Transitions Elite helped make my practice very attractive to the best buyers. I could never have done this on my own!”

Dr. David Graeff 

“I knew that I would get the best value for my practice if I had Transitions Elite helping me. I got a fabulous deal thanks to them!” 

Dr. Sharon Gorman

Key Factors Influencing Valuation of of Your Veterinary Practice

There are several factors that influence how much corporations are willing to pay for a veterinary practice. Understanding these can help you prepare for a sale and maximize your valuation.

Location, Location, Location

Where your veterinary practice is located plays a massive role in its value. Practices in metropolitan areas or regions with high pet ownership rates are in higher demand, driving up their valuations. Urban and suburban practices tend to attract more clients, generate higher revenues, and have greater growth potential. On the flip side, rural practices might struggle to attract the same level of interest, which can lead to lower valuations.

But it’s not just about geography—where your practice sits within its local market matters too. For example, a practice located near a bustling dog park or in a high-traffic area with excellent visibility is likely to be more valuable than one tucked away in a less accessible spot.

Revenue and Profitability

Your practice’s financial health is a key driver of its valuation. Corporations are particularly interested in practices with consistent revenue growth and strong profit margins. If you’ve kept your practice financially stable and growing, that’s a big plus in the eyes of potential buyers.

In 2024, corporations are also keeping a close eye on revenue streams beyond the usual veterinary services. Practices that offer additional services like boarding, grooming, or specialized treatments might command higher valuations. For example, if your practice has a thriving grooming service that keeps clients coming back regularly, it’s going to look very attractive to buyers. Additionally, if you’ve streamlined operations to maximize profitability, your practice is likely to be valued more favorably.

Client Base and Retention

A large and loyal client base is a significant asset. Corporations love seeing strong customer retention because it means stable and predictable revenue. Practices that have established long-term relationships with their clients—especially those offering recurring services like wellness plans or preventive care programs—are more attractive to buyers.

The demographics of your client base can also play a role. Practices serving affluent communities or areas with a high concentration of pet owners are often more valuable due to the higher spending power of their clients. For instance, if your practice is in an upscale neighborhood where clients are willing to invest in premium pet care services, that’s going to boost your valuation.

Facilities and Equipment

The condition of your facilities and equipment is another crucial factor. Modern, well-maintained facilities that offer a welcoming environment for clients and their pets are likely to attract higher offers. Practices equipped with the latest veterinary technology and diagnostic tools are often seen as more valuable because they offer the potential for enhanced service offerings and increased efficiency.

In 2024, there’s a growing emphasis on practices that have embraced digital technology. If you’ve implemented electronic medical records (EMRs), telemedicine, and other digital tools, your practice is likely to be viewed as more forward-thinking and better positioned to meet the evolving needs of pet owners.

Staffing and Operational Stability

The quality and stability of your team are critical factors in your practice’s valuation. Corporations are particularly interested in practices with a stable, experienced staff, including multiple veterinarians. A well-trained and loyal team ensures continuity of care, which is essential for maintaining client relationships and sustaining your practice’s revenue.

Practices that have implemented strong management systems and operational processes are also more attractive to buyers. Efficient operations reduce the risk of disruptions during the transition period and help ensure a smooth handover. On the other hand, practices with high staff turnover or operational inefficiencies might be valued lower due to the perceived risks.

Growth Potential

While your current performance is important, corporations are also looking at your practice’s future growth potential. Practices that have demonstrated the ability to attract new clients, expand services, or increase revenues are more likely to receive higher offers. Corporations are particularly interested in practices that have identified untapped markets or have plans for expansion.

In 2024, growth potential is often linked to your practice’s ability to adapt to changing industry trends. If you’re proactive in adopting new technologies, expanding service offerings, or responding to shifts in client demands, your practice will likely be viewed as having greater long-term value.

Preparing Your Practice for Sale

If you’re thinking about selling your veterinary practice in 2024, it’s crucial to take steps to maximize its value before going to market. Here are some strategies to help you get started:

Optimize Financial Performance

Take a close look at your practice’s financials and identify areas where you can improve profitability. This might involve streamlining operations, reducing costs, or increasing revenue through new services or pricing strategies. A strong financial performance will make your practice more attractive to buyers and help you command a higher valuation.

Invest in Facilities and Equipment

Consider upgrading your facilities and equipment to ensure they are modern and well-maintained. This might include renovating your practice’s interior, investing in new diagnostic tools, or implementing digital technologies. A practice that looks and feels up-to-date will be more appealing to potential buyers.

Strengthen Client Relationships

Focus on building and maintaining strong relationships with your clients. Consider implementing loyalty programs, wellness plans, or other initiatives that encourage repeat visits and long-term commitment. A loyal client base is a valuable asset that can significantly enhance your practice’s value.

Ensure Staff Stability

Work to retain your key staff members and ensure that your team is well-trained and motivated. Consider offering incentives or professional development opportunities to keep your staff engaged and committed. A stable and experienced team will make your practice more attractive to buyers.

Plan for Growth

Identify opportunities for growth and develop a strategic plan to expand your practice’s services or client base. Whether it’s adding new specialties, expanding your facilities, or targeting new markets, a growth plan can enhance your practice’s appeal and value.

Seek Professional Valuation and Advice

Finally, consider engaging a professional valuation expert or broker who specializes in veterinary practices. They can provide an objective assessment of your practice’s value and offer guidance on how to maximize it. Additionally, they can help you navigate the sale process and negotiate the best possible deal.

Conclusion: Navigating the Veterinary Practice Sale Market in 2024 with Transitions Elite

The veterinary practice sale market in 2024 is both dynamic and competitive, with corporations willing to pay a premium for practices that meet their criteria. For practice owners, this presents a unique opportunity to secure a lucrative exit, provided they understand the factors driving valuations and take steps to prepare their practices for sale.

By focusing on optimizing financial performance, maintaining modern facilities, building strong client relationships, ensuring staff stability, and planning for growth, practice owners can maximize their practice’s value and attract the best offers from potential buyers. However, navigating this complex landscape can be daunting, especially for those unfamiliar with the intricacies of practice valuation and negotiation.

This is where Transitions Elite  plays a crucial role. As experts in veterinary practice sales, Transitions Elite is dedicated to helping practice owners achieve the best possible outcomes when selling their practices. With a deep understanding of market trends, valuation drivers, and buyer behavior, Transitions Elite provides personalized guidance throughout the entire sale process—from initial valuation to closing the deal. Our team of experienced professionals works closely with practice owners to prepare their practices for sale, ensuring that all aspects of the business are optimized to attract top offers. Whether it’s advising on financial performance, enhancing practice facilities, or negotiating with potential buyers, Transitions Elite is committed to maximizing the value of your practice and securing a successful sale.

In a market where demand continues to outpace supply, partnering with Transitions Elite ensures that you are well-prepared to capitalize on this trend and achieve your financial goals. Whether you’re planning to sell in the near future or simply want to understand your practice’s value, Transitions Elite is your trusted partner in navigating the complexities of the veterinary practice sale market.