Selling your veterinary is never going to be an easy choice, although we as experts cannot be more emphatic when diagnosing such a decision as to the smartest one possible. Whether your desire is to sell your practice as an exit strategy and retire in some Caribbean beach, or if you like to increase revenue through the expansion of the business, at Vet’s Best Friend we have alternatives for each case.
Considering the complexity of the decision, however, we have prepared some Frequently Asked Questions that we believe cover some of the major concerns owners have when starting designing a veterinary practice sale. Let’s take a look at how to properly sell your practice and we can start with pinpointing the details with you in little to no time. Keep reading until the end!
How has the price calculation evolved over the years?
The first thing to know is that two parameters are usually used to buy the practice. One is the profit, whose technical name is EBITDA. And the other one is the gross income, that is to say, what the clinic has invoiced in the last year. Buying by EBITDA is very logical because you are buying the profitability of the clinic. In previous years the first investment funds paid 4 times the EBITDA.
But, between the pandemic that caused a huge halt in getting clinics to buy and new funds coming into play with lots of fresh money and the need to buy, they started to use gross turnover as a method of calculating the price.
It was also a consequence of the fact that the veterinary clinics did not have their accounts properly done and that generated a lot of discussions about those veterinary practice appraisals. So, by using the value of the gross revenue, an agreement could be reached more easily as they were very clear numbers.
Is EBIDTA or Gross Turnover the only factor to take into account when selling my practice?
Certainly not. There are many more things to take into account. A very important one is if you are going to have deferred payment, that is, if you are going to be paid a part of it in the next few years. It is also important to assess whether that part is linked to results.
Some funds do not want a full veterinary practice acquisition contract, but rather a percentage that makes them majority partners with decision-making capacity over your center. That means that you still own a significant percentage of your clinic, but for all practical purposes, your opinion is heard.
Essential considerations on how to sell your practice
As for everything in life, the best thing to do is to be prepared. The more profitable your center is, the more likely it is that you will be able to raise the price. That means improving processes, avoiding superfluous expenses and controlling stocks and investments. American consultants who help sell clinics usually spend three years to improve results before selling the center.
The second thing is to have your accounts immaculate, that you can prove to the potential buyer every dollar you earn and every dollar you spend, including the salary of the owner or owners of the clinic.
Thirdly, it can be very interesting to hire a consultant to value your center and serve as a negotiating basis.
In that sense, and if you need additional information, please reach out to us directly by calling 617-987-4910 or visiting our website. Our team will be waiting for you and ready to help you make the best out of this heartwarming business.