Practice goodwill

Selling your veterinary practice will be the biggest transaction you will ever undertake, so it is vital to get a feel of its value before moving forward.

Many practice owners are being regularly approached by the corporate practices with the offer to buy and the price is often based on very little reliable information.

The VBA specialises in veterinary practice sales and offers a free on-line valuation tool designed for incorporated practices ”” which can provide a guide to the potential worth of your practice.

Knowing the possible valuation range of values allows you to decide both, the exit route to be taken and how you are going to approach the actual sale.

A professional practice broker can make selling a business a lot less painful, but you’ll need to choose wisely to make sure that they do not just only sell the practice but maximise the final selling price. Once you have an idea of how much you can expect from an eventual sale, we can help discuss the process of selling and how we would handle your practice’s sale.

The process of arriving at a value for a practice is complex and is not just based upon turnover or profit, but a multitude of facts and judgements. The valuation tool allows an indicative view on the practices goodwill value from the information entered. However, the final price paid by the corporate buyer will be based upon a number of other factors, hence the range that is shown in the valuation report.

Practices with the same turnover can have profitability as a % of turnover ranging from <10% to >20% Obviously when undertaking a sale on behalf of a client The VBA will look into all of these factors to take a view on the potential achievable price.

Some of these will increase the value others will decrease the value, but they all need to be considered.

Quantitative Factors

  • Historical and projected financial performance
  • The current maintainable profit
  • Maintainable earnings multiples from previous purchases/sales
  • Income arrived from third party service suppliers. (e.g. laboratory tests)
  • Potential for improved performance

Qualitative Factors

  • Quality and accuracy of the sales information memorandum
  • Practice location and demographics (income/pet ownership)
  • Management systems and staff quality and stability
  • Level of competition
  • Type and size of practice
  • Secure property occupancy and market rental values.
  • OOH cover
  • Dependency upon retaining owner
  • Part of buying group
  • Practice standards scheme

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These factors help to determine how much the potential purchaser will pay. However, your practices value is only what a buyer feels it is worth and so it is essential that the benefits of the practice are laid out clearly and professionally to maximise the sale value to the purchaser.

With every sale you need to attract a number of potential buyers to increase competitiveness, as dealing with a single initial approach is a sure way of failing to achieve full value.

Experience and knowledge of the veterinary market is the key to selling a practice at its best price. At The VBA we have that experience and can use it to help you to achieve the maximum price for your practice.