When it comes time to sell your veterinary practice, buyers are going to dig deep into your numbers. Understanding which metrics matter most can make all the difference between a smooth, profitable sale and one that stalls. In a recent 360 Vet Sales conversation, CEO Matt Arena broke down the three (well, four) metrics every buyer will review.
1. Revenue — and the Story Behind It
Buyers want to see not just your total revenue but your revenue trend. The sweet spot for many is $1.2–$1.4 million or higher in annual revenue. More importantly, they want to see growth, not stagnation or decline. Growth can come from modest, consistent price increases and from higher production volume. If revenue is flat or slipping, it may be better to address that before going to market.
2. Adjusted EBITDA — Your True Earnings Power
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) gets adjusted to reflect what your financials would look like under new ownership. That means removing personal or one-time expenses, like paying a family member for services a buyer might handle in-house, and adding in reasonable owner compensation if it’s missing. Since valuations are often based on this number, maximizing adjusted EBITDA before a sale can directly increase your selling price.
3. Payroll and Production — Are They in Balance?
Buyers look closely at payroll costs, particularly for DVMs, compared to the revenue those DVMs generate. A healthy range is typically 20–22% of production. A well-balanced production mix across your veterinarians is key. If one DVM is producing 75–80% of your revenue, that’s a red flag. Losing that person could take the practice’s value with them.
4. Client and Invoice Trends — Growth Beyond Price Increases
This “bonus” metric is becoming more important in a tighter market. Buyers don’t just want to see revenue increases from higher prices; they also want to see your client base and invoice count growing. Tracking month-over-month and year-over-year client volume helps demonstrate that your growth is sustainable.
Bottom line: If you have healthy numbers across these four areas, you’re in a strong position to start the selling process. If you find red flags, you may want to address them before going to market. Buyers look at more than 100 factors during due diligence, but getting these right sets the tone for a successful sale.