How Earn-Outs Work in a Rarebreed Veterinary Partners Sale

The idea of a high-multiple exit sounds great, until you realize half of it rides on hitting performance benchmarks you can’t fully control. For many clinic owners exploring a Rarebreed Veterinary Partners sale, this is the real crossroads: how much of your exit depends on earn-outs, and what’s actually achievable once the deal closes?

Unlike the generic offers from corporate giants, niche buyers like Rarebreed, Alliance, and Community Vet Partners lean heavily on structured incentives. Done right, these models can deliver premium payouts. Done wrong, they lock practice owners into years of stress with little upside.

If you’re exploring your exit options or already fielding offers, this guide will help you compare structures, understand earn-out triggers, and identify which buyer types are best suited for your goals.

Rarebreed Veterinary Partners Sale: What Are They Really Offering?

Veterinary owners who’ve received letters of intent from Rarebreed often run into the same issue: the numbers might look generous at first, but the way the deal unfolds over time is anything but straightforward. 

The vet sales and transfer looks simple at first, but then, it can quickly become a long-term financial handoff, especially if you don’t fully understand what’s tied to future clinic performance or staffing.

Rarebreed doesn’t follow a single formula across its acquisitions. Their proposals differ. Sometimes even within the same region. And while this may sound like a benefit, it also means owners need to read between the lines. Not every dollar promised is paid upfront, and not every role post-sale is optional.

The Core Building Blocks of a Rarebreed Offer

Rarebreed typically blends three elements in every proposal:

• Immediate cash paid at closing
• Earn‑out payments tied to measurable post‑sale performance
• Defined retention period (clinical, leadership, or advisory role)

These elements change based on your EBITDA, DVM count, and staff continuity. Here’s how they usually align:

Component	Typical Range (2025)	Key Notes for Practice Owners
Upfront Payment	60%-75% of the agreed valuation	Based on adjusted EBITDA, not gross; timing of disbursement specified in LOI
Earn‑Out	25%-40% over 12-36 months	Benchmarks include revenue retention, staff stability, or EBITDA margin targets
Seller Retention	1-2 years, tapering roles possible	Impacts the eligibility for full earn‑out
Real Estate	Leaseback preferred, purchase optional	Lease terms negotiated alongside the deal; affects valuation
Equity Participation	Rare for single‑site clinics	Considered only for multi‑site or platform practices

How the Payment Unfolds Over Time

Let’s take a step-by-step view of how most Rarebreed offers have looked in 2025. It is based on recent seller-side experience from 2-3 DVM clinics with stable EBITDA and good contracts in place.

You’ll typically find three major layers in the deal:

• An amount paid at closing, usually between 60-75% of the estimated price
• A series of payouts is scheduled over 12 to 36 months
• Involvement from the owner during the transition, often negotiated based on the associate’s strength

If you’re wondering what triggers those future payments, it’s usually continued revenue, staff consistency, and the clinic’s ability to hit earnings goals after you’re no longer at the helm.

Scenario: What the Numbers Might Look Like

Let’s say you’re operating a two-doctor clinic with $450,000 in adjusted EBITDA. Your team is stable, you’ve kept your lead techs for more than three years, and you’re planning to stay on part-time for at least 12 months.

Here’s how the math might play out:

• Total payout offered: $3.375 million (based on a 7.5x multiple)
• Upfront amount at close (70%): $2.36 million
• Remainder (30%): $1.01 million, paid only if certain post-sale goals are met
• Lease terms: 10 years, often locked in during early legal review

The second tranche of money may never arrive if your associate decides to leave or if your active client base drops. Practice owners who don’t realize that these payouts aren’t guaranteed often walk away disappointed, even if the headline number looked strong.

What Gets Monitored After the Sale

Rarebreed’s second payments are based on post-close performance. That means your final amount depends on:

• How much of your revenue stays intact over the next 24 months
• Whether your core team continues working at the same level
• Whether expenses stay aligned with prior years

For example, if your clinic’s gross decreases by 12% due to a competitor opening nearby, or if you lose a long-time tech and hiring gets delayed, your future payouts can shrink without warning.

These details are not always spelled out clearly in the LOI. You need to ask what revenue thresholds apply, how team retention is measured, and what the margin tolerances are for full disbursement. Anything vague or left out will almost always work in the buyer’s favor, not yours.

Why Your Books Must Be Ironclad

If there’s one consistent theme across sellers who received lower-than-expected offers, it’s messy bookkeeping. Rarebreed will not build your adjusted EBITDA around verbal justifications or last-minute spreadsheets.

Their financial teams will recast everything: DVM salaries, owner distributions, one-time personal costs, and even your software expenses. If they think your add-backs don’t hold up, they’ll recalculate your profitability and lower your multiple.

To protect your number, here’s what should be locked in before you even request an LOI:

• Fair-market compensation reflected on payroll, not just in theory
• Profit margins that exclude personal spending and gray-area deductions
• Multi-year P&Ls with clean categories and no ambiguity in expenses
• Contracted associate agreements with real dates and clauses

What’s Negotiable in a Rarebreed Veterinary Partners Sale?

Some parts of Rarebreed’s offer are non-starters. Others are more open than they seem if you ask early enough. 

Here’s what practice owners have been able to shift:

• Deferred Payment Conditions. If you’re staying on and your team is stable, there’s room to push for clearer timelines and less risk tied to performance changes after close.
  
• Post-Sale Involvement. Your hours and responsibilities aren’t always fixed. With enough associate coverage, sellers have shortened or re-scoped their role without hurting the payout.
  
• Payout Schedule. Some owners have negotiated smaller gaps between payments or earlier installments, especially when the financials are solid and staffing isn’t in question.
  
• Lease Terms. Buyers almost always prefer a lease. But terms around length, increases, and responsibilities can often be adjusted during legal review and not be accepted as-is.

How Community Veterinary Partners Structures Their Earn-Outs

For many owners, Community Veterinary Partners (CVP) is appealing because of its regional focus and softer onboarding process. But once the LOI is in front of you, the part that deserves the most scrutiny isn’t the total number but how much of it hinges on what happens after closing. 

CVP is among the buyers that lean heavily on staggered payouts, and understanding how those are written can save you from surprises later.

Recent sale scenarios (especially for clinics with $350k – $600k adjusted EBITDA) show that CVP typically releases 55–65% of the agreed price at closing. The rest is part of the total, but it only arrives if the clinic keeps running smoothly under new ownership. 

Here’s what practice owners should prepare for:

• 12 to 36 month payout windows for the second and third payments
• Targets around revenue and staff retention, but without hard thresholds visible in early documents
• Clinical involvement from the owner for at least a year (often longer if the owner drives more than 40% of production)
• No equity participation, unless the owner joins a roll-up deal with multiple locations

What makes CVP different is that they tend to keep things conversational in the early stages. This can make the deal feel less rigid, but it also means the actual obligations aren’t always spelled out until the diligence phase. Vet practice owners who wait to ask about payment terms until legal review often lose the leverage they had early on.

In short: if you want predictability, ask for the terms behind every number.

Upfront Cash vs. Earn-Out: What Do Rarebreed Deals Look Like This Year?

For most practice owners considering a Rarebreed offer, the headline figure doesn’t tell the full story. A deal worth $3 million on paper might deliver just over $2 million at closing, and the rest may depend on future results that aren’t entirely under your control. 

That’s not a red flag; it’s how modern veterinary M&A now functions. Buyers share risk with sellers by tying part of the payout to ongoing clinic health.

Based on research, Rarebreed’s 2025 deals for 2-3 DVM clinics generally follow this pattern:

Component	Estimated Share	Timing	Condition for Release
Immediate Cash	60-75 %	Paid at closing	None. Final after funding clears
Deferred Portion (Earn-Out)	25-40 %	12 – 36 months post-sale	Based on clinic performance and staff continuity
Retention Role	12 – 24 months	During the earn-out period	Required for full deferred payment eligibility

Here’s what that looks like for a practical example:

A clinic with $500K in adjusted EBITDA at a 7.5x multiple could expect a total price near $3.75 million. Of that, around $2.6 M arrives at closing, with another $1.1 million tied to post-sale targets such as steady revenue, margin stability, and keeping both DVMs active.

Many clinic owners assume that earn-outs are automatic. They are not. Every clause in the purchase agreement defines how the buyer interprets “performance.” If revenue dips or staffing changes occur, payments can shrink or stretch over additional months.

Before signing, clinic owners should request these clarifications in writing:

• What specific figures define continuity (e.g., minimum gross, adjusted margin, or client count)?
  
• What happens if one DVM resigns?
  
• Who verifies the numbers each quarter: your accountant or theirs?

Deals that start clearly tend to close smoothly; vague earn-outs usually lead to frustration or delays.

Which Practice Profiles Qualify for Premium Multiples?

Two clinics can report similar top-line earnings and still land wildly different offers. That’s because buyers like Rarebreed and Alliance are evaluating how a clinic runs without the owner in the middle of everything.

Clinics that attract premium multiples have one thing in common: consistency that can be backed up with documentation.

Clinic Type	Adjusted EBITDA	Active DVMs	Typical Multiple Range	Seller Involvement Post-Sale
Solo Owner Clinic	$250K – $400K	1 DVM	4x – 6x	Short transition (6-12 mo)
2-3 DVM Practice	$350K – $650K	2 – 3 DVMs	6x – 8x	Moderate (12-18 mo)
4-7 DVM Practice	$600K – $1.2 M	4 – 7 DVMs	9x – 15x (high tier)	Extended (18-24 mo)

Clinics that fall into the higher end of these ranges tend to bring four things to the table. 

✅First, the owner isn’t carrying most of the production.
✅Second, rebooking and client loyalty are stable month over month.
✅Third, the team has contracts on file, and turnover is low.
✅Fourth, the financials are supported by a formal veterinary practice appraisal and never a rough spreadsheet pulled together last minute.

For clinic owners preparing a one- to two-year exit, working on these elements can shift the multiple significantly. In many cases, buyers reward prepared clinics by reducing how much they withhold.

How Rarebreed Compares to NVA, Thrive, and Mars

A seller negotiating with Rarebreed and NVA at the same time will notice the difference before the term sheets arrive. NVA comes with a process. Rarebreed comes with conversation.

Here’s what to expect if you’re in talks with more than one group:

• NVA will often start by asking for financials and payroll, then turn that into a fixed deal offer within 2-3 weeks. Their proposals are usually cash-heavy, with straightforward retention timelines. If you want a fast close and don’t mind a less flexible LOI, it’s appealing, but the margin for negotiation is slim once things are in motion.
• Thrive often promises higher overall prices, but they rarely come without strings. Earn-outs are built into almost every offer. You’ll be expected to hold margin, revenue, and staffing for 2-3 years, and sometimes, Thrive sets conditions that can be hard to verify or manage after closing.
• Mars isn’t usually in the market for small, general practices anymore. It’s for larger clinics or those in metro areas. These deals are cash-driven, but come with corporate branding, longer seller retention, and strict post-sale SOPs.
• Rarebreed operates in a smaller lane but offers more individual input along the way. You’ll have time to shape your exit, clarify your post-sale role, and protect your clinic’s brand if that’s important to you. Their earn-outs aren’t light, but they’re usually transparent and often negotiable if you come prepared.

If you’re weighing multiple buyers, the question isn’t just who pays more. It’s who gives you terms that make sense for the role you want to play after you hand over ownership.

Who Pays More: Community Vet Partners vs. Rarebreed?

When comparing Rarebreed and Community Veterinary Partners (CVP), sellers often start with one question: who pays more? Well, it depends on what your clinic brings to the table and how much of the payout you’re willing to wait for.

Here’s the difference between CVP and Rarebreed.

• CVP often presents a faster path to liquidity. If you’re retiring soon, if your staff has short-term contracts, or if your clinic is running lean on systems, CVP may give you more up front. It’s less about growth plans and more about capturing existing income.
• Rarebreed tends to go deeper. They’re often more thorough with financials, they ask more about internal workflows, and they’ll press harder on production breakdowns. But if your practice is well prepared, with a recent appraisal, long-tenured DVMs, and audited EBITDA, you’re more likely to see a higher offer in the long run.

That’s not to say one group is better. They simply work with different seller profiles:

• CVP: Shorter timeline, lighter diligence, less appetite for long transitions
• Rarebreed: More complex terms, longer upside, more detailed review

Clinics with good infrastructure and financial transparency often prefer Rarebreed to maximize long-term earnings. Clinics focused on a shorter transition, or where the seller is looking to step away more quickly, may find CVP’s higher upfront share more appealing even if the overall price is lower.

Tax Implications of Earn-Out Heavy Deals

When a sale includes an earn-out, the tax conversation can’t be an afterthought. For many practice owners, it’s the first time they’re dealing with multi-year income tied to business performance they no longer fully control. That creates a very different tax picture than a simple cash-out at closing.

Here’s where it gets complicated: not all earn-out money is treated the same. How it’s taxed depends on how the contract defines the payments and how closely you’re involved after the sale. 

If the IRS sees you as still “working for the business,” part of your deferred payout could be classified as compensation. This becomes especially relevant in deals with staggered payments over 24-36 months. 

If you’re staying on as a clinician or in a leadership role, and you’re earning income tied to clinic performance, your accountant may not be able to classify that money the same way as the lump sum received at closing.

You also have to look at timing. If the sale straddles 2 or 3 tax years and the later payments arrive after the practice has experienced a change, you could face issues around valuation support, delayed recognition, or even disputes if performance metrics are missed.

That’s why you need two things before you sign:

1. A tax advisor who understands how veterinary M&A deals are structured (not just a general CPA)
   
2. Clear contract language that separates post-sale services from business value

Without those, sellers often end up paying more than they expected, not just in tax, but in lost clarity about what was earned.

Note: Bring your tax advisor into the process before due diligence starts. Not at the end. And make sure they’re familiar with how veterinary business exits are handled. Not just theoretically, but based on current IRS treatment patterns.

Conclusion

Selling to Rarebreed, or any niche group like CVP or Alliance, isn’t just about the number on the offer. What shapes your outcome is how the payout unfolds, what’s tied to post-sale conditions, and whether your clinic is ready to hold up during diligence.

Multiples vary, but well-prepared sellers tend to walk away with cleaner deals and fewer surprises. That means clear financials, solid contracts, and a team that’s ready to carry the clinic forward.

If you’re planning to exit in the next 12-24 months, start now. Waiting until you get an LOI leaves little room to shape the terms or fix what buyers flag later. So, start early in fixing your financials. 

FAQs: Rarebreed Veterinary Partners Sales