Selling your veterinary practice is a significant step and ensuring that you’re fully prepared can help maximize its value. Here’s how:
- Establish a Timeline: Ideally, plan at least 12 months in advance to allow ample time to organize your financials, operations, and team.
- Get Your Accounting in Order: Buyers want clean, well-documented financials. Ensure all accounts are reconciled, categorized properly (e.g., breaking down revenue by services like pharmaceuticals, labs, and consultations), and follow industry-standard charts of accounts. Accuracy is critical because errors can erode a buyer’s confidence, leading to reduced valuation offers.
- Maintain Healthy Profit Margins: Buyers are looking for practices with EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) in the sweet spot of 20-25% of revenue. If margins are too high, buyers may assume the business is being run too lean and adjust downwards during negotiations. Anything lower could be perceived as a lack of efficiency, prompting concerns about potential profitability.
- Balance Your Production: A balanced production between veterinarians is key. If one doctor produces the majority of revenue, buyers may see the business as high-risk if that doctor leaves post-sale. Ensure associate veterinarians are contributing to the practice’s production equally.
- Doctor Compensation: Make sure your veterinarians are paid within industry standards. Over- or under-compensated doctors could impact your practice’s sale price since a buyer may need to adjust salaries, which would affect future profits.
- Streamline Practice Operations: Buyers want to see a smoothly running practice. Ensure you have clear processes in place, minimal staffing issues, and an ability to recruit new associates if necessary. Demonstrating a well-managed, scalable practice is more attractive to potential buyers.
By following these steps, you can present a practice that is not only financially stable but also operationally sound, increasing your chances of receiving top-dollar offers. If you’re considering selling your veterinary practice and need guidance, reach out to us at 360 Vet Sales for expert advice on how to prepare for market and maximize your valuation.