Recap: How Do Interest Rates and an Election Affect the Market?

A little girl bringing a kitten at medical officeIn a recent episode of 360 Half Seconds, Matt Arena, CEO of 360 Vet Sales, discusses the complexities of the veterinary practice market and how it responds to various factors, including interest rates and elections. This conversation is especially important for veterinary practice owners who are considering selling their businesses and want to know how market shifts might affect their sale.

The big takeaway? Timing the market can be tricky—and it’s influenced more by internal industry dynamics than outside events like elections or fluctuating interest rates. What we do know, is that the prices investors are paying now for practices are at their highest in three years, making now a good time to get a valuation (free at 360 Vet Sales) and discuss your next steps.

How Does the Market Change?

One of the most significant points made in the discussion is that the market doesn’t follow a clear-cut schedule. According to Matt, there’s no way to predict exactly when the market will change, much like trying to predict the stock market. While some owners may try to time their sale based on upcoming elections or interest rate changes, this may not be the most effective strategy.

Matt emphasizes that “nobody knows” for certain when the market will rise or fall. What veterinary practice owners should really pay attention to are the internal factors within the industry.

What Really Influences the Market?

While elections and interest rates are often seen as big market influencers, Matt explains that they don’t have as much impact on the veterinary practice market as many might think. Instead, factors like recapitalizations and mergers within the industry itself play a much bigger role. When major corporate buyers recapitalize or merge, it can significantly shift the multiples they’re willing to pay for practices, which in turn affects overall market trends.

For instance, Matt notes that some corporate buyers may have raised capital during a period of low interest rates, allowing them to pay higher multiples for veterinary practices. On the flip side, a corporate buyer who raised money at higher interest rates may be more conservative in their offers. However, trying to time your sale around these shifts could be a fool’s errand, according to Matt.

Recapitalizations and Mergers: The Real Game-Changers

A key factor in determining how much buyers are willing to pay is whether a buyer has recently gone through a recapitalization. When buyers recapitalize—essentially bringing in new money—they may adjust the multiples they’re willing to pay, especially if they didn’t recap at the expected rate. If multiple buyers are undergoing recaps, this can create a ripple effect throughout the industry, potentially lowering practice valuations.

But it’s not all bad news—recapitalizations can also bring in fresh funds, which may lead to aggressive acquisitions as buyers look to grow their market share. As Matt notes, “any buyer that has those types of goals, they’re going to have to pay to make sure they’re gaining more market share.”

Should You Wait to Sell?

Matt advises against waiting for external factors like elections or interest rate changes to dictate your timing. Instead, focus on industry dynamics and the appetite for acquisitions within the veterinary sector. Trying to predict what will happen with the broader economy is a gamble, and you may miss out on an excellent opportunity in the meantime.

Now May Be the Best Time to Sell

In summary, if you’re thinking of selling your veterinary practice, don’t get too caught up in interest rates or upcoming elections. The market is dynamic, and timing your sale depends more on your unique circumstances and what’s happening within the industry itself. With the veterinary practice market currently performing well, it could be the perfect time to explore your options.

If you have questions or want more information about selling your practice, reach out to 360 Vet Sales—we’re here to help you navigate the complexities of the market and make an informed decision.

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