How to Maximize the Value of Your Practice – Even If You’re Selling Years from Now
Even if you’re not planning on selling a veterinary practice soon, that doesn’t mean you can’t start looking to increase its value. There are plenty of things practice owners can do in the months or years before selling that can drive up current and eventual value. And the best part about preparing early? You can reap the benefits of a highly valuable business now and for years to come – before enjoying a higher sales value when it comes time to move on.
Veterinary practice valuation considers many different variables, but buyers are often looking for a practice that is performing well, has consistent revenue, and is set up to continue to deliver steady profits. Here are five tips for vet practice sellers and owners who want to maximize their practice value now and in the future.
1. Recruit More DVMs
One of the biggest value multipliers for a veterinary practice is moving from a single-doctor to a two-doctor to a three-doctor (and so on) operation. Buyers view multi-setups as more sustainable, more scalable, and, therefore, more valuable. A single vet, even if they are high producing, can hurt valuation as buyers see an overeliance on one person.
2. Demonstrate Revenue Growth and Stability
Practices that show consistent growth in revenue and profitability (unsurprisingly) attract higher multiples. Buyers value predictable cash flow and a solid operational structure, and use it as a sign of potential future earnings. Showing a strong financial trajectory, even if you’re not ready to sell immediately, can significantly improve your future sale price.
3. Reduce Owner Critical Hours
Can your practice survive without you working full time? Practices where the owner works fewer clinical hours are often seen as more valuable, as it’s clear the practice can still function without you. When you first consider selling, try reducing your hours first and setting up processes that allow things to keep functioning without full reliance on you. This will help increase the value of the practice when you do decide to sell.
4. Build An Operationally Sound Practice
A business that runs well with streamlined processes and management is much easier to take over – and therefore much more attractive to potential buyers. If you haven’t already, systemizing (or even digitizing) your billing, HR, and other key business processes will make your practice more appealing when it comes to selling. Ensuring others in the team also know how to manage these processes will also be highly beneficial.
5. Position Your Practice to Attract Private Equity
Today’s best deals come from private equity-backed aggregators looking for well-run, profitable practices. Optimizing your practice to appeal specifically to these types of buyers can be hugely advantageous, as they are often willing to pay a premium and let your existing team stay in place.
Get Expert Support & Advice for Selling a Veterinary Practice
Choosing when to sell your vet practice is a highly personal decision, and if you’ve dedicated years or decades to the business, it can be a very difficult one. The best thing you can do for yourself, your practice, and your employees is to ensure you understand how to value your veterinary practice and how to increase that value. A vet practice sales advisor can help you with both.
Transitions Elite are expert veterinary sales consultants with over $250M of sales to our name. We work with you through the entire process of valuation and sale of your practice, and can provide expert advice on how to position your practice for private equity buyers even before you’re ready to hand over the reins.
