When considering the sale of your veterinary practice, many owners compare their situation to peers who sold in the past at high multiples. However, the market has changed significantly over the last few years. During the COVID-19 pandemic, veterinary practices experienced a boom, leading to unprecedented valuations of up to 19x earnings before interest, taxes, depreciation, and amortization (EBITDA). This surge was driven by a combination of increased pet ownership, strong demand for veterinary services, and an influx of private equity investors eager to capitalize on the growth in the veterinary industry.
However, as the bubble market has subsided, today’s valuation multiples have returned to more sustainable levels, ranging from 10x to 12x for well-established practices in ideal locations. While this is a decrease from the COVID peak, it still represents a significant increase compared to pre-pandemic valuations, which typically hovered between 5x to 7x.
For practices with fewer veterinarians or those in less desirable locations, multiples may fall in the 7x to 9x range. Practices with consistent growth, balanced production among doctors, and attractive locations will continue to receive competitive offers.
Why Waiting for Higher Multiples Might Not Be the Best Move
If your main goal is to maximize financial returns, waiting for valuation multiples to return to COVID-era highs might not be realistic. The market has stabilized, and there is no indication that the industry will see another surge in valuations anytime soon. In fact, experts believe that multiples may settle at their current levels for the foreseeable future.
That said, if your practice is missing a doctor, or there are other elements that could negatively impact your valuation, it may be worth considering short-term improvements before going to market. Consulting with us now can help you determine whether waiting is beneficial or if now is the optimal time to sell.
Preparing to Sell Your Practice
If you’re considering selling your veterinary practice, it’s crucial to prepare well in advance. Buyers are looking for practices with strong financials, healthy margins, and growth potential. Practices that are owner-dependent or lack a succession plan may struggle to attract high offers.
Additionally, keep in mind that many buyers expect the seller to stay on for a transitional period, usually around three years, to ensure continuity in the practice. This means that even if you’re not ready to retire immediately, now could still be a good time to sell while committing to a few more years of involvement.
Don’t hesitate to reach out to 360 Vet Sales for a personalized evaluation and expert advice on when to sell your practice and how to maximize its value.