As such, for many people, veterinarians, and businesses alike, owning a veterinary practice would be a dream. If you’re a veterinarian, having control over the direction of your business while reaping the rewards of ownership makes buying a veterinary practice an attractive alternative.
A key part of any purchase of a veterinary practice are the financials. A clear, upfront understanding of the cost of buying a vet practice is critical to your business plan and success in becoming your own boss.
If you want to know how much buying a veterinary practice costs, this article is for you!
What is The Cost of Purchasing A Veterinary Practice?
“How much does it cost to buy a veterinary practice?” In all fairness, this is one question that has no definitive answer – it depends on many factors.
Here is the truth:
According to Transitions Elite, the basic rule is that the cost of acquiring an existing veterinary practice depends on each practice. Here’s what we mean:
What is the size of the practice? How much profit can be expected? Where is it located? What about its competitors? What kind of clientele are they serving? Is it a specialized vet practice? These questions make the answer quite variable in their results.
Why Buy An Established Vet Practice Vs. Starting Anew?
We will be the first to admit that both approaches have advantages and disadvantages. Nevertheless, the following are some benefits you are likely to enjoy when you buy an existing veterinary practice:
- You can save time.
- You can take advantage of the previous owner’s reputation.
- You can benefit from the previous owner’s client base and enjoy the instant cash flow.
- You can leverage the power of an attractive location.
- It is easier to secure financial aid/loans using a practice with years of existing records, e.g., a 3-year tax report.
What Is Involved In Buying A Veterinary Practice?
Buying a veterinary practice is like buying any other business, which means you must do due diligence.
A good way to start is through a valuation of the vet practice.
Cost Of A Veterinary Practice: Valuation
Vet practice valuation tries to as accurately as possible answer questions like:
- How much will it cost to buy the practice?
- What are the assets and liabilities of the business?
- What kind of growth potential does it have?
When purchasing a vet practice, you need to be confident that your investment will pay off with high returns over time.
With that said, how does one valuate a veterinary practice?
You have two options:
- DIY – Do It Yourself if you know how.
- Hire an expert that specializes in vet practice valuation.
However, the take-home point is:
DIY means you go through all the paperwork to assess value based on what’s in front of you. It is highly recommended if you have prior experience in finance and accounting or if you’re tech-savvy and comfortable using Excel spreadsheets and other financial modeling software. However, it can take hours and hours to get everything together, so if that’s not something you enjoy doing or don’t feel confident enough about your skills, hiring an expert is highly recommended.
Negotiations
Having figured out the worth of a vet practice, you will negotiate with the seller to agree on a price. The seller may accept your offer, reject it, or make an alternative proposal. You may then counter this until you reach an agreement or abandon negotiations.
It can be an exciting process, but it can also be stressful. And most importantly, it thus requires skills and experience to get the best deal for yourself. Here are some simple tips:
- Determine what you want from the deal regarding location, size, equipment, and staff.
- Know your limits in terms of price and timeframe for completing the transaction.
- Pay attention! If you don’t know what something means, ask! Don’t sign anything until the other party has answered all of your questions and cleared up any misunderstandings, so there are no surprises later on.
- Do not let emotions cloud your judgment – if you do not like the first deal offered by a seller, don’t hesitate to walk away from it; there will be more opportunities down the line.
- Know what else is available in terms of other vets selling their practices nearby – this will give you perspective when negotiating prices with sellers.
- Get help! An experienced advisor will usually have dealt with many similar situations before and knows what is involved in buying a vet practice. Doing this can help you save time and money in the long run and prevent costly mistakes during negotiations.
Closing The Deal
The purchase contract will detail all terms of sale, including payment schedules, warranties, representations and covenants, and so on. Once you have agreed to all terms and signed a purchase agreement, you will need to secure financing for your purchase.
Financing
Depending on how much money you want to put down on purchasing your new vet practice, you may need to apply for financing from one or several different sources.
Where To Buy A Vet Clinic/ Establishment
If you are looking for where to buy a veterinary practice, many options are available. The First thing to do is look at your local area and see what is available. A great way to do this is by using the internet and searching for veterinary clinics for sale in your area.
If you want to avoid the risks, hassle, and costly mistakes associated with buying another veterinarian’s clinic or hospital, consider working with an experienced partner. They can help you with everything you need – from preparation to valuation and transitioning post-purchase.
Conclusion.
A good practice doesn’t come cheap, but if you can afford it and are passionate about the profession, buying an established vet practice will be worth every penny.