How many of you couldn’t catch a break during the pandemic? Animal shelters were nearly emptied as stressed and lonely people stuck at home reached for the comfort of a companion animal. And, of course, that meant many more clients and busy days for you as a veterinary professional.
And while having a steady—and even growing—business throughout the pandemic is something to be immensely grateful for, it also means you tackled a stressful two-plus years. Now, you are tired. And potentially—maybe, possibly—ready to sell your practice.
Taking the first step to selling your practice, though, is not an easy decision. You have worked your entire life to build your business. You have spent countless hours learning your trade as a veterinary student, launching your veterinary clinic, training your employees, and caring for your clients and patients. And what a worthwhile and meaningful career you have built!
The good news is that, if you decide to sell, it is a highly lucrative time. And by finding a trustworthy company to partner with, you can rest assured that you could both make a profit and continue the lasting legacy for which you’ve worked so hard.
As you consider this important milestone, here is some helpful information. We’ll discuss who these companies that buy veterinary practices are as well as the ins and outs of how to sell your business.
What are Veterinary Practice Consolidators?
What a mouthful! Put simply, they are companies that buy multiple veterinary practices. Just like with any industry, there are some consolidators who honor and protect the individual veterinarian’s company culture and brand, while others absorb the practice into their larger corporation. Keep this in mind as you figure out which type of consolidator you would be interested in partnering with. Most fall into the following categories.
- Individual veterinary hospitals and practices that have merged. Many animal hospitals and vet practices have seen their businesses organically grow over time. As a way to strengthen their general practice, some choose to join with other like-minded providers. These mergers tend to grow slower, allowing them the time and space to put patient care first and develop sound business operations.
- Private Equity (PE) firms looking for a safe and profitable investment. For years, private equity firms have been interested in purchasing and funding vet practices because it is an incredibly stable industry. And with the growth veterinary clinics experienced during the pandemic, PE interests have only increased.A PE firm’s goal is to use its business expertise and resources to increase a clinic’s profits and, in time, resell the business. With the backing of a PE firm, a clinic’s revenue can increase significantly in a relatively short amount of time.
- Entrepreneurs who see veterinary specialties as business opportunities. This is when veterinary clinics open in pet stores, which helps make veterinary care more affordable and accessible.
- A unique type of veterinary consolidator: AmeriVet. Our promise is to honor and support the business you have worked so hard to create. We want to set you—and those who will follow in your footsteps— up to continue doing what you do best: caring for animals.We provide customized business support and bring you into a larger network to more easily and sustainably grow your practice. We are not looking for a quick profit. Instead, we hope to find long-term partners interested in continuing to create thriving veterinary practices.When thinking about acquisitions, you may immediately think of the biggest companies. But what could it look like to find a true, like-minded partner? What if the veterinary industry was filled with value-driven consolidations? That is AmeriVet’s mission.
What a Veterinary Practice Acquisition Looks Like
Each category of consolidators will handle a veterinary acquisition differently. Some will be interested in your company’s core ethos; others will want to see your books. Some will want to fold you thoroughly into their branding. Others will allow you to retain your original name, flavor, and flare.
But how, exactly, does the process work?
- Initial Contact: The industry is so hot that you may very well have already been contacted by a company (or several!) interested in buying your practice. But suppose that specific company doesn’t feel like a good fit. You should do your own research to find the right fit for you.
- Network with other practice owners: If genuinely interested in selling your practice, it would be wise to connect with other veterinarians. Find out what their practices are valued at and how it compares to yours. If you know a vet who has sold their practice, ask them about the process and what they learned.
- Research different veterinary partners: Choosing a company that will buy your practice for its worth and will align with your values is crucial. Be thoughtful about who you sell your practice to, and give yourself the time to get a feel for the different options.
- The Official Start of the Process: You might choose to meet with a consolidator in person to learn more about who they are and their interest in your clinic. This initial relationship building could last for a few months. But the process will officially start when they draft a Letter of Intent (LOI), which describes the initial terms of the acquisition. An LOI is not an official contract, but it will require you to not discuss the terms of the deal with anyone else and prevent you from considering other potential partners. So don’t sign an LOI until you are fully ready to move forward with a specific company.
- Assessing the Veterinary Practice: Once the LOI has been settled, an official contract will start to be drafted. In order to figure out the details of the contract, the buyer will need to take a closer look at your practice. They’ll look into your financials, state of equipment and facilities, your staff, and other areas of your business.
- Informing Your Team Members: One of the trickiest steps in the process will be breaking the news to your staff. These people have likely become family, as you have worked so closely together. How you position the sale and how it will affect your staff is incredibly important. You want your staff to feel peace about the decision to sell and, hopefully, to continue working for the clinic after the deal is finalized.
- Signing the Contract: A contract is typically signed before the sale’s closing date. This is because the company is likely receiving money from a bank or venture capitalist to purchase your clinic. The banks and venture capitalists want to know that the deal is signed and sealed before offering the funds.
- Closing of the Deal: A contract will often require certain things to happen before the deal can officially close. For example, the staff might be asked to commit in writing to stay with your clinic for a certain period of time. Or you might need to work with your landlord to ensure the lease is up to date. Whatever the requirements, once all is complete, your attorneys will email signed contracts to each other. And, poof! The deal is done.
How Long does the Acquisition of a Veterinary Practice take?
You can expect the process of selling your practice to take at least six to eight months. This includes the three to four months you spend getting to know a company to see if it might be a good fit. Hopefully, this is the beginning of a long-term, mutually-beneficial relationship. Do not rush it. Take your time and do your due diligence in research and relational development.
If you decide to move forward with a consolidator, it is, on average, three to four months from signing the Letter of Intent to officially closing the deal.
What Do Companies that Buy Veterinary Practice Look For?
You should feel proud of the work you have put into creating a stable and lucrative veterinary medicine practice. And in today’s market, your clinic is more valuable than ever.
In order to know how to properly assess the value of your clinic, it is important to know what companies are looking for. What makes one vet practice more valuable than another?
Of course, it’s not an easy answer. Each company looking to acquire will have a different focus. Some focus on a single geographic area, such as Texas or New York; others on the type of practice; and others on the potential for future growth.
Smaller consolidators often have particular standards for the practices they acquire. One might look for well-established and highly reputable clinics, with at least two tenured veterinarians, a highly skilled staff, and revenue that exceeds $1.5 million.
Others will look for a specific type of practice. One may only be interested in clinics that are located in local pet and retail shops. Another may want to buy emergency and specialty hospitals that have a desire to grow and value compassion-first care for pet owners.
By selling your practice, you could receive more money than you ever thought possible. You can find companies interested in a quick, cut-and-dry sale. Others will look to truly partner with you. If you are looking to retire, be mindful that you could be asked to stay on for a couple of years to help ease the transition.
The AmeriVet Difference
How good does it feel to even consider not having to take care of payroll or worry about dealing with insurance companies? What a huge weight off your shoulders!
One of the best benefits of joining a larger company is access to all their business support, well-oiled systems, and time-tested best practices. While this support is incredibly tempting for you as a small business owner, it can also be a trap.
Large companies will expect to have a say in future plans. They may promise to only focus on the back end. But more often than not, that is not how it plays out. By joining their group, you could be signing away control of your practice and your voice in future decisions.
Amerivet’s business model, however, is distinctly different. We are not interested in dominating your practice but in honoring all you have accomplished. We genuinely want to partner with you to continue growing your business.