For years (or maybe even decades), you’ve put time, effort, and passion into building your veterinary practice. So, when it comes time to sell, it’s only natural to want that effort reflected in the offer you get from a buyer. Whether you’re moving on to something new or maybe starting retirement, boosting the value of your practice (and the amount you can get for it) is important for setting you up for your next chapter.

When it comes to how to sell your veterinary practice, the first step is to get a vet practice valuation to understand where you stand. If the valuation is lower than you’d like or need it to be, don’t worry. There are some small changes you can make to boost the value of your practice prior to selling, ensuring you get an outcome that reflects its true worth.

How Veterinary Practices Are Valued

It’s important to understand how to value a veterinary practice before you try to increase its value. This will ensure you invest your time in the right areas to get the best return. There are a few different ways that practices are appraised before a sale and can be used alone or together to provide the most accurate value.

Income-Based Approach (Discounted Cash Flow, DCF)

This method is often the most commonly used for veterinary practices. It calculates the present value of your practice based on its projected future income, using a discount rate to account for risk. The more predictable and stable the practice’s income, the higher the valuation. 

Market-Based Approach (Comparable Sales)

This method involves comparing your veterinary practice to similar practices that have recently sold. Key factors for comparison include location, size, services offered, and client base. The ability to use this method is significantly impacted by market conditions and the recent sales of practices in the area. 

Asset-Based Approach (Net Asset Value) 

The asset-based approach focuses on tangible assets, including equipment, real estate, inventory, and any other physical property. It also factors in the value of intangible assets, like goodwill, brand reputation, and intellectual property. This method is more common when a practice’s financial performance is inconsistent, or there are significant non-operational assets involved. 

Multiples of Earnings

A simpler approach often used in veterinary practice sales involves applying a multiple to the practice’s earnings, such as EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). The multiple applied will depend on factors such as the practice’s size, location, growth potential, and risk. 

There are some specific variables that can impact how much a veterinary practice sells for that need to be considered at this stage, including location, specialization, and state-specific regulations. Areas with high real estate values, populations, and rates of pet ownership will increase the value of your practice – as might specific specializations (like surgery, oncology or exotic animals).

How to Boost the Value: Veterinary Practice Valuation Tips

Your hard work deserves to be recognized when it comes time to sell. By focusing on improving both tangible and intangible assets, you can create a more attractive business for potential buyers. If you are planning on selling soon, here are some of our top veterinary practice valuation tips that can be achieved quickly and with minimal investment:

1. Improve Financial Health and Record-Keeping

• Ensure all financial statements are up to date, accurate, and easy to understand. 
• Focus on streamlining operations and reducing unnecessary expenses. 
• Ensure your practice is showing positive cash flow. 
• Minimize or eliminate debt.

2. Enhance Client Retention and Relationships

• Strengthen relationships with existing clients by improving customer service and communication. 
• Keep detailed, organized client records.

3. Strengthen Online and Local Presence

• Ensure your practice has a strong online reputation.
• Encourage satisfied clients to leave positive feedback. 
• Update your website to ensure it’s professional, user-friendly, and marketable. 

4. Increase Operational Efficiency

• Evaluate and optimize internal operations, from scheduling to inventory management. 
• Ensure your practice’s equipment is up to date and in good working condition. 
• Set up regular maintenance and replace outdated equipment.

5. Address Any Legal and Compliance Issues

• Ensure all legal documents, such as lease agreements, supplier contracts, and employee contracts, are in good standing and easy to transfer.
• Ensure your practice is fully compliant with state and federal regulations, including health and safety laws, veterinary licensing, and business permits.

Engaging Expert Support

If you’re looking to sell your practice in the near future, the best thing you can do to improve the value of your practice and ensure you get a fair offer is to seek professional valuation and advice. Before putting your practice on the market, it’s wise to consult with a veterinary practice sales advisor who can help provide an accurate estimate of your practice’s value and offer specific guidance on how to improve its sale price. After all, you’ve worked hard to build something meaningful, and this transition should honor that.