The vet world we knew 10 years ago is drastically different from our world today. If you’re a vet practicing in 2023 with the hopes of retiring in the next 5 to 10 years, I’m sure you’ve at least considered a corporate buyout. But, what exactly IS a corporate buyout? …and is it the best thing for you?

What is a veterinary corporate buyout?

Let’s first talk about “what exactly IS a corporate buyout?” Well, a veterinary practice corporate buyout is when an independent veterinary hospital is bought by a corporation or private equity firm. The payout is typically based on gross receipts and/or EBIDTA. EBITDA is net income (earnings) with interest, taxes, depreciation, and amortization added back.

Most of the veterinary practices that have considered corporate buyouts do so because the corporate firms have the funding to make bigger offers and they don’t have an individual interested in buying or taking over the practice. But, not all practices qualify for a buyout.

The minimum requirements (in most cases) for a veterinary corporate buyout are about $1.5 million in gross receipts on your P&L, at least 2 full-time veterinarians, and at least 3 exam rooms. Having 3 exam rooms might seem silly at first, but when you think about the revenue each exam room brings and the opportunity for profit, you’ll quickly realize that the third room is key.

Not all practices qualify for corporate buyouts (obviously). But, there are other options if you’re looking to retire (and sell) in the next 5 to 10 years and don’t meet the minimum requirements.

Non-corporate buyout options

Some of these options include mergers (where two practices would merge to reach the minimum gross receipts total), earnouts for Associate Veterinarians (where you would bring in another vet who gets some ownership through service and helps you meet the minimum vet requirement, while also increasing your revenue), and even finding a non-corporate buyer (this is often times a younger veterinarian who is looking to buy their own practice).

How do I sell my veterinary practice?

So, by now, I’m sure you’re wondering, “Well, how does a veterinary practice owner even go about trying to sell their practice?” …and the answer is simple. You work with Southern Practice Consulting Group (SPCG).

To give you a scenario of what SPCCG does to assist with a corporate buyout… imagine this scenario:

You’re a single veterinarian practice whose facilities aren’t super great (you only have two exam rooms and could use an update/remodel), your P&L’s show $800,000 in gross revenue (which is great), and you want to sell your practice to a corporation. How do you improve your Practice Health ScoreⓇ to meet the minimum requirements for a corporate buyout?

SPCG will first, assess your financial health via our Practice Health AssessmentⓇ. Then, we will put together an action plan that spans one to ten years and gives you goals to meet with each and every phase.

Often times, with the scenario laid out above, we would help you determine if you needed to bring on another veterinarian (and help you figure out the best method to do so… i.e. earnout, merger, direct hire, etc.), remodel to add another exam room, remodel to make the facility more modern and attractive, and/or clean up record keeping and financial records. Then, we would assist you with the next phase of growth and all that is involved (which could be things like offering benefits such as disability and life insurance or retirement plans, etc.)

We’ve helped 250+ practices in the last 20 years meet their financial goals–from corporate buyouts, to associate earnouts, to mergers, to selling to a colleague, to growing their business and setting up the exit strategy they will need down the road.

We help set up benefits programs to keep your employees and associates happy and satisfied and give you added protection with guaranteed issue disability and life insurance. We help you create buy/sell agreements and get your personal financial plans in order.

According to a recent study by Brakke Consulting, nearly 25% of all veterinary practices are now owned by corporations. In addition, 40-50% of all vet visits belong to a corporate veterinary practice. So, whether or not a corporate buyout is right for you and your practice, corporate buyouts are here to stay and will very much be part of future considerations when it comes to retirement for veterinary practice owners.

At the very least, reach out to Southern Practice Consulting Group and let us give you a FREE Practice Health AssessmentⓇ. You never know what the future holds, but at least when the decision of “where to next” comes, you will have all the information and data needed to make an educated decision about your future.

Don’t own a practice? Let us help you reach your personal financial goals.

Categories: General Blog

1 Comment

Emerald Coast Veterinary Conference – Southern Practice Consulting Group · May 17, 2023 at 4:23 pm

[…] Whether you’re looking to sell your practice (a percentage or the entirety), merge your practice, or bring on another vet in preparation for retirement, SPCG has worked with 250+ practice owners do just that. You never know what the future holds, but at least with a Practice Health Assessment®, when the decision of “where to next” comes, you will have all the information you need to make an educated decision about your future. Learn more about veterinary practice corporate buyouts […]

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