How Practice Location Can Influence a Veterinary Practice Appraisal

Would you rather have a veterinary practice yielding 10% profit, or 20% profit? When asked this question, most veterinarians would immediately select the latter. However, when buyers begin to search for a practice to acquire, their first question is not about the profitability of the practice, but rather its location. A well-located practice may be more valuable than a practice with higher profit. Thus, location plays a key role in a veterinary practice appraisal.

Buying a veterinary practice is not only about receiving a positive return, but also an investment in the quality of life of the area. A valid comparison can be made regarding the acquisition of real estate. When looking to buy a rental home, the sole purpose of that investment is to receive a good return. The investor is only concerned with its purchase price and rental revenue. However, when looking to buy a personal home, location and quality of life become critical.

The location of a practice not only affects the veterinarian, but also his/her entire family. While the veterinarian will spend most days at their practice actively engaged with their profession, spouses and children must also be happy with the community.  The social, educational, and community network must be compatible with the expectations of the buyer’s family.

The question then becomes whether a more profitable practice in a less desirable location is valued higher in a veterinary practice appraisal than a less profitable practice in a highly desirable location. While the practice must generate enough revenue to improve the buyer’s financial position after the acquisition, it does not necessarily need to generate as much profit as the 20% profit practice. The less profitable practice can be more valuable when analyzed from a quality-of-life perspective.

In the end, the value is not just in the numbers or the profit. A veterinary practice appraisal must also take into consideration the overall quality of life that the practice provides to the veterinarian and his/her family.