How Corporate Ownership of Veterinary Practices Legally Works in 2026: CPOM, MSOs, and What It Means for Sellers

Key takeaways

• Roughly 15 states let anyone own a veterinary practice outright, about 18 restrict ownership to licensed veterinarians, and the rest sit somewhere in between. Counts vary by how you define “restricted,” so always check your own state’s statute.
• The corporate practice of veterinary medicine (CPOM) doctrine is the legal reason a PE-backed offer in a restrictive state splits into 2 closings: a veterinarian-owned entity keeps the medicine, and a management services organization (MSO) buys everything else.
• The MSO earns its money through a long-term management fee, which is exactly the mechanism some 2025-2026 state bills now target as a workaround to ownership limits.
• What you sign changes in a restrictive state: an asset purchase agreement, a management services agreement you will not see until diligence, an employment agreement that commonly runs 2 to 5 years, with attorneys reporting terms lengthening, plus non-compete and holdback terms.
• New York’s A9042 would add a state review step to veterinary sales of $200,000 or more, North Carolina’s SB 570 stalled but is not dead, and Colorado already swept veterinary deals into 60-day merger notice. None of these has blocked ordinary practice sales as of mid-2026.
• None of this law caps your price. Structure determines how the deal is papered; competition determines what you are paid.

There’s a question I hear at a predictable moment, usually about 20 minutes into dinner with an owner who just received her first PE-backed offer. She flips to the structure diagram, sees 2 buyer entities where she expected 1, and stops.

“Wait. I thought only a veterinarian could own a practice in my state.”

She’s right. And the offer in front of her is legal anyway.

Both things are true at once, and the reason is a body of law most owners have never had to think about until the day it shows up in their own letter of intent.

In roughly 15 states, anyone can own a veterinary practice outright. About 18 states restrict ownership to licensed veterinarians, and the rest sit in between.

PE-backed groups buy practices in restrictive states legally by splitting the deal: a veterinarian-owned entity holds the medicine, while a management services organization, an MSO, buys the non-clinical assets and runs operations for a fee.

That paragraph is the whole legal architecture in miniature.

The rest of this piece unpacks what it means for you as the seller: what the doctrine actually says, how the MSO structure works, what lands on your signature line, and what the 2025-2026 wave of state legislation could do to your closing timeline.

What is the corporate practice of veterinary medicine, in plain English?

The corporate practice of veterinary medicine, CPOM for short, is state law that restricts who can own or control a veterinary practice. In restrictive states, only a licensed veterinarian or a veterinarian-owned entity may hold the practice or employ veterinarians.

The stated purpose is to keep clinical judgment with clinicians, not investors.

The doctrine borrows from human medicine, where corporate practice of medicine rules have existed for the better part of a century.

The theory is simple: an investor who owns the hospital might pressure the doctor on what to prescribe, what to charge, or when to euthanize versus treat.

So restrictive states draw a line. The entity that owns the practice, employs the DVMs, and holds the medical records must itself be owned by a veterinarian.

Where owners get tripped up is assuming the line is national. It is not.

Veterinary ownership law is a 50-state patchwork, and your deal documents will look meaningfully different depending on which side of the patchwork your hospital sits on.

Which states let a non-veterinarian own a veterinary practice in 2026?

Roughly 15 states currently permit non-veterinarians to own a veterinary practice outright, per a veterinary-focused law firm’s 50-state analysis. About 18 states ban non-veterinarian ownership, per the American Economic Liberties Project’s 2025 count.

The remainder restrict ownership in some form through statute, board rule, or court decision, which is why the two counts never quite add to 50.

I want to be straight about the numbers here. Different sources count 15 to 18 restrictive states depending on how they treat gray-zone rules, so treat any tidy map you find online as directional, not gospel.

Category	Approximate count	Example states	What it means for your PE-backed deal
Non-veterinarian ownership permitted outright	~15 states	Varies; confirm with counsel	Buyer can purchase the practice entity directly. One closing, simpler paper.
Non-veterinarian ownership banned	~18 states	Kentucky, Illinois, Indiana, Michigan, Pennsylvania, New York, North Carolina cited among restriction states	Deal must run through an MSO structure. Two closings, more documents, more counsel time.
Restricted or gray zone	Remainder	Statute, board rule, or case law specific	Structure depends on the specific restriction. Diligence takes longer.

Kentucky, Illinois, Indiana, Michigan, Pennsylvania, New York, and North Carolina all appear on restriction lists compiled by veterinary counsel. New York is repeatedly described as among the strictest, since its licensing framework means only a DVM-owned professional entity may hold the practice at all.

If your hospital is in a permissive state, a PE-backed group can simply buy it. If you are in a restrictive state, the same buyer wants the same practice just as badly.

The law does not stop the acquisition. It reroutes it.

What is an MSO, and why does your offer letter mention one?

An MSO, a management services organization, is a legal entity separate from the veterinary practice that provides administrative services: billing and collections, IT support, human resources, payroll, accounting, purchasing, and marketing. It earns a management fee under a long-term contract.

In a PE-backed acquisition, the MSO is usually the entity that actually buys your non-clinical assets.

Veterinary transaction counsel at Mandelbaum Barrett describe the arrangement plainly: the MSO enters a long-term agreement to provide those services in exchange for a management fee.

That fee is how the economics of the practice flow to an owner who cannot, under state law, hold the practice itself.

Think of it as splitting your hospital into 2 layers. The clinical layer, the professional entity that employs the DVMs and holds the records, stays veterinarian-owned.

The operational layer, everything from the building lease to the payroll run, moves to the MSO.

This is not a loophole someone invented last year. It is decades-old architecture borrowed from human health care, used across the country by essentially every PE-backed group, and it is the reason consolidators can operate hundreds of hospitals in states that ban non-veterinarian ownership.

It is also, candidly, the exact mechanism some legislatures now want to close.

The American Economic Liberties Project’s 2025 model bill, the Save Our Pets Act, has 3 planks: ban non-veterinarian ownership, outlaw the MSO fee structure that routes around such bans, and strengthen state review of veterinary practice mergers.

That is an advocacy position, not law, but it tells you where the political conversation is pointed.

What do you actually sign in an MSO-structured sale?

In a restrictive state, your sale typically splits into a set of linked documents.

An asset purchase agreement in which the MSO buys the non-clinical assets, a transfer of professional assets to a DVM-owned entity where required, and a long-term management services agreement between that entity and the MSO.

Then your employment agreement, a non-compete, and indemnification terms with a holdback.

This is the part almost nobody writing about veterinary ownership law covers, because almost all of it is written for buyers. You are not buying.

You are signing, and the stack in front of you deserves a walk-through.

The asset purchase agreement. The MSO buys the equipment, the inventory, your interest in the facility, the trade name, the goodwill. Goodwill, for clarity, is the intangible value of the practice beyond its physical assets, the client relationships and reputation buyers are mostly paying for.

The professional entity transfer. In restrictive states, the clinical assets, records, and DVM employment move to a veterinarian-owned professional entity, sometimes one the buyer’s affiliated veterinarian already controls. This is the second closing owners never expect.

The management services agreement. The MSA is the contract that defines what the MSO runs and what fee it collects. You will usually not see it until diligence, and if you retain equity, it governs the economics of your investment for years.

Read it with counsel, line by line.

Your employment agreement. Veterinary transaction attorneys reported in March 2026 that selling veterinarians are increasingly asked to remain 4 to 5 years after closing, stretching the earlier 2-to-3-year standard. That is a real change in what “selling” means for your next half-decade — our guide to how long you have to stay after selling walks the full term ladder.

Earn-outs and rollover equity. An earnout is part of the price paid later, only if the practice hits agreed targets after closing. The same attorneys note earn-outs are increasingly tied to post-closing EBITDA, your practice’s operating profit before taxes and accounting choices, rather than revenue alone, and that joint-venture structures where the seller keeps a meaningful minority stake are now more common than traditional full buyouts in many deals.

And here is the question I push every owner to ask before anything gets signed: where does my rollover equity legally sit? Almost always it sits in the MSO or its parent, not your practice.

Your return stops tracking your hospital and starts tracking the platform, which changes both your risk and your rights. Rollover terms are a distinct legal workstream, and veterinary counsel treat them that way.

One more piece of plumbing worth knowing. At closing the buyer wires the agreed funds directly to you, and a defined portion is typically held back for a period to secure your representations.

That holdback is a negotiated term like everything else.

Who controls medical decisions after closing?

In CPOM states, licensed veterinarians retain control of clinical judgment as a matter of law, and well-drafted management agreements carve out medical decisions explicitly. What moves to the MSO is the operational layer: purchasing, pricing frameworks, staffing budgets, scheduling systems, and marketing.

The legal line is clear; the day-to-day feel of that line depends on the buyer.

This is the question underneath the question when owners ask me about ownership law. They are not really asking who holds the stock.

They are asking whether someone in a distant office will start dictating how their doctors practice.

The honest answer has 2 halves. Legally, the doctrine exists precisely to prevent non-clinicians from interfering with a veterinarian’s professional judgment, and buyers in restrictive states paper their MSAs to respect that line because their whole structure collapses if they do not.

Practically, operational control still changes your building. Formularies get standardized.

Lab contracts get renegotiated. The pricing sheet stops being yours.

Neither half should be a surprise on day 1, and the sellers who end up happiest are the ones who pressure-tested the clinical-autonomy language before they signed rather than after.

Post-sale disappointment is one of the recurring mistakes owners make when selling a veterinary practice, and it is almost always a diligence failure, not a legal one.

What are New York, North Carolina, and Colorado doing about veterinary ownership in 2026?

Since 2025, more than a dozen states have proposed legislation touching health care consolidation, and several bills now reach veterinary deals directly. New York’s A9042 would add attorney general review to veterinary transactions of $200,000 or more.

North Carolina’s SB 570 targeted MSO ownership before stalling. Colorado’s SB 25-198 already swept veterinary entities into 60-day merger notification.

For 20 years this area of law barely moved. Then, in roughly 18 months, it became one of the most active corners of state health policy, and a selling owner in 2026 should know exactly which bills could touch a closing timeline.

State	Bill	Status as of early 2026	What it would mean for a seller
New York	A9042	In Assembly Agriculture Committee (referred January 7, 2026)	Written notice to the state within 14 days of agreeing to a covered transaction of $200,000+, before closing; AG can challenge deals “against the public interest”
North Carolina	SB 570	Missed the May 8, 2025 crossover deadline; stalled, language could resurface through the 2026 session	Would have barred professionals from owning shares in MSOs serving their own practices and required MSOs contracting with practices to be professionally owned
Colorado	SB 25-198	Enacted framework sweeps veterinary care entities into AG merger notification	Notice 60 days before closing; AG power to investigate and enjoin or unwind a material transaction
California	SB 351 (template only; covers physicians and dentists, not veterinarians)	Signed October 6, 2025; effective January 1, 2026	Codifies corporate practice of medicine limits on PE control of clinical operations; the template other states copy

A few of these deserve a closer look.

New York would be first. Mintz’s January 2026 analysis notes that if A9042 passes, New York becomes the first state to pair CPOM-style ownership limits with a veterinary transaction-review regime. The bill covers asset sales of $200,000 or more, mergers, acquisitions, and even capital distributions that reduce equity by $200,000 or more.

North Carolina stalled, not died. Dechert’s June 2025 alert on SB 570 flagged that the bill carried no compliance grace period at all, and that its language could still ride other vehicles through the end of the 2026 session. Sellers in the state should have counsel watching it.

California is the template, not the rule. SB 351 regulates physician and dental practices, not veterinary ones. I include it because state legislatures copy each other, and its playbook, voiding contracts that let investors control clinical staffing, records, or billing, is precisely the language advocacy groups want applied to veterinary medicine next.

There is federal pressure in the background too.

In 2022 the FTC required divestiture of 6 clinics in the JAB and SAGE Veterinary Partners transaction and imposed a 10-year prior-approval requirement for certain specialty and emergency acquisitions within 25 miles of existing clinics in California and Texas, the first order of its kind.

Two senators followed with public letters to major consolidators in 2024 asking about the industry’s structure. Scrutiny of the sector is real, and it is not going away this cycle.

What does all of it mean for you? Mostly this: review regimes add notice periods, and notice periods add days or weeks to closings.

A well-run sale in 2026 builds legislative awareness into the timeline from the first conversation, the same way it builds in licensing transfers and landlord consents.

Does any of this change what your practice is worth?

No. Ownership law shapes how a deal is papered, not what buyers will pay.

Consolidators now own roughly 25 percent of primary care practices and about 75 percent of specialty and emergency hospitals, representing around 50 percent of nationwide veterinary revenue, per peer-reviewed 2025 research.

Capital keeps flowing to structures that comply with every state’s rules, and price is set by competition, not statute.

The scale of the buyer pool is worth sitting with for a second.

Private equity invested an estimated $45 billion in US veterinary deals between 2017 and 2022, per Octus’s credit research, and as of the third quarter of 2025, business development company lenders alone held $3.1 billion in principal lent to veterinary platforms.

A decade ago, consolidator ownership sat under 10 percent of practices. Current estimates reported by PBS NewsHour run 30 to 50 percent of all practices, depending on how you count.

Whatever the exact figure, the buyers who built that footprint did it in permissive states and restrictive states alike, which tells you the law has never been the binding constraint on demand.

The binding constraint on your outcome is process. A single PE-backed group negotiating alone will structure the deal correctly for your state and price it for their own benefit.

Several qualified groups bidding against each other will structure it just as correctly and price it very differently, a dynamic we cover in depth in our guide to what private equity is paying for veterinary practices.

If you want to understand who those groups actually are, their platforms, brands, and backers, start with our profile of the major veterinary consolidators. Knowing the buyer pool is half of understanding your own leverage.

What should you do before signing an LOI in 2026?

Three things. Retain veterinary transaction counsel who works in your state’s ownership framework, and insist on seeing the management services agreement and rollover terms during diligence rather than after.

Then run a competitive process, so the structure and the price are both tested by more than 1 buyer.

Legal structure is table stakes; competition is where your outcome is decided.

I have never once seen a good practice fail to sell because of CPOM. I have, again and again, watched owners leave money and terms on the table because they treated the first correctly-structured offer as the only possible offer.

The buyers know the law cold. Their counsel has papered the same MSO structure hundreds of times, in your state, this year.

The asymmetry is not legal knowledge, it is market knowledge: they know what every recent deal in your region cleared, and you know one number, theirs.

Closing that gap is the entire reason our Elite Selling System exists.

We hand-select and vet every buyer who gets to bid on your practice, the way a doorman with a velvet rope lets in only the right people, then run a private competitive bidding window inside that vetted group.

The structure each bidder proposes still has to comply with your state’s ownership law. The price they propose has to survive competition.

If you are earlier in the journey, our guide to selling a veterinary practice walks the whole arc from first thought to closing day.

And when you are ready to talk specifics about your own hospital, that conversation starts with a number, which is where we can help right now.

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What should you do next in 2026?

Most owners reading this are 1 conversation away from knowing whether the offer in their inbox, or the one they suspect is coming, reflects what their practice would clear in a real competitive process.

That conversation costs nothing, commits you to nothing, and usually reframes the entire decision.

If you are weighing whether and how to sell your veterinary practice, start with the number. Everything else, the structure, the state law, the MSA, gets negotiated from there.

Start with a free, confidential estimate of your practice’s value.

Our engagement model is success-based: we are compensated when your sale closes, with fees that vary depending on the value of the practice.

That means we only take on practices we believe we can genuinely move the number for, and it means our incentive from day 1 is the same as yours.

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Frequently asked questions

Can a PE-backed group legally buy my practice if my state says only a veterinarian can own one?

Yes, in almost every restrictive state. The buyer splits the transaction: a veterinarian-owned professional entity holds the license, the medical records, and the clinical side, while the buyer’s management services organization purchases the non-clinical assets and runs operations under a long-term management agreement.

The structure is well established, but it has to be papered correctly for your specific state.

What is the corporate practice of veterinary medicine in plain English?

It is the body of state law that restricts who can own or control a veterinary practice. In restrictive states, only a licensed veterinarian or a veterinarian-owned entity may own the practice or employ veterinarians.

The purpose is to keep clinical judgment in the hands of clinicians rather than investors.

What is an MSO in a veterinary practice sale?

A management services organization is a separate legal entity that provides administrative services to a practice, things like billing and collections, IT, human resources, payroll, and accounting, in exchange for a management fee. In a PE-backed acquisition, the MSO is usually the entity that actually buys your non-clinical assets.

Where does my rollover equity sit in an MSO deal?

Almost always in the MSO or its parent holding company, not in your practice. That distinction matters because your return no longer tracks your own hospital’s performance; it tracks the whole platform.

It also matters legally, since some proposed state laws target professional ownership of MSO shares directly.

How long will I have to keep working after closing?

Commitments of 2 to 3 years remain the standard ask, and veterinary transaction attorneys report recent deals stretching to 4 to 5 years, especially when earn-outs or rollover equity are involved. The length is negotiable, and it is one of the terms that competition between buyers moves the most.

Will New York’s proposed law delay or block my sale?

If A9042 passes as written, covered transactions of $200,000 or more would require written notice to the state within 14 days of agreement and before closing, and the attorney general could challenge deals judged against the public interest. As of early 2026 the bill sits in committee.

Watch it, but do not let a pending bill panic you into a rushed sale.

Who controls medical decisions after a PE-backed group buys my practice?

On paper, licensed veterinarians. CPOM states require that clinical judgment stay with clinicians, and well-drafted management agreements carve out medical decisions explicitly.

Operations, purchasing, pricing, staffing budgets, and marketing typically move to the MSO, which is where the practical day-to-day changes show up after closing.

Do new state laws apply to a deal I have already signed?

Generally, new transaction-review laws apply to deals that close after their effective date, and ownership statutes rarely unwind existing structures; Connecticut’s proposed 2025 restrictions, for example, grandfathered existing holdings. But generally is not legal advice.

If a bill is moving in your state, your counsel should map its effective date against your closing timeline before you sign.

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Sources

Legal and regulatory analysis

1. Mintz. “No ‘Paws’ in Oversight: Will New York’s Proposed Veterinary Transaction Review Law Take Effect in 2026?” January 14, 2026. mintz.com
2. Dechert LLP. “Latest CPOM Developments: NC SB 570 Stalls.” June 2025. dechert.com
3. Holland & Knight. “Q2 2025 Update on State Efforts to Regulate Healthcare Consolidation.” April 2, 2025. hklaw.com
4. McGuireWoods. “New California Laws Increase Scrutiny on Healthcare Deals.” October 13, 2025. mcguirewoods.com
5. Cooley. “California’s New Laws: What Private Equity Needs to Know About Healthcare Investment Restrictions.” December 16, 2025. cooley.com
6. Paul Hastings. “Considerations for Private Equity After FTC Vet Clinic Deal.” July 7, 2022. paulhastings.com
7. Mahan Law. “Non-Veterinarian Veterinary Practice Ownership Laws by State.” mahanlaw.com
8. Mandelbaum Barrett PC. “When Should Veterinarians Consider Forming a Management Services Organization?” March 12, 2020. mblawfirm.com
9. Mandelbaum Barrett PC. “The New Normal: Joint Ventures, Longer Commitments, and the Rise of Earn-Outs.” March 17, 2026. mblawfirm.com

Government and legislative primary sources

10. New York State Senate. “Assembly Bill A9042.” 2025-2026 legislative session. nysenate.gov
11. North Carolina General Assembly. “Senate Bill 570.” 2025 session. ncleg.gov
12. Federal Trade Commission. “JAB Consumer Partners / National Veterinary Associates / SAGE Veterinary Partners, In the Matter of.” 2022. ftc.gov
13. Office of U.S. Senator Elizabeth Warren. Press release and letters regarding veterinary industry consolidation. August and November 2024. warren.senate.gov

Industry research and market data

14. Traub-Werner, B., et al. “Making the Case for a Resurgent U.S. Independent Veterinary Practice Segment: A SWOT Analysis.” Frontiers in Veterinary Science. May 13, 2025. frontiersin.org
15. Octus. “Private-Credit Exposure to Veterinary Rollups Shows Growing Dispersion; VSOs Under Increasing Pressure.” January 16, 2026. octus.com
16. PBS NewsHour. “As Veterinary Costs Climb, Private Equity Ownership of Clinics Draws Scrutiny.” July 1, 2026. pbs.org

Policy advocacy

17. American Economic Liberties Project. “The Save Our Pets Act: Stopping the Corporate Takeover of Veterinary Practices.” 2025. economicliberties.us