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Buying A Veterinary Practice

10 Things That Can Affect Veterinary Practice Value

Dec 1, 2017 11:14:06 AM

The shutterstock_272925929.jpgvaluation of your veterinary practice is one of the single most important topics when considering to sell your veterinary practice. Not only is there a lot of money on the line, but also a lot of emotion and personal connections to consider. These personal connections can affect the way we value our practices and can make it hard to get a fair and objective valuation from a professional. Instead, we'll focus on the 10 qualitative factors that you should really be considering.

  1. Goodwill Value - There are lots of rumors about goodwill value and what's considered "standard." The truth is that goodwill value is entirely subjective based on the transferability of your practice to another individual.
  2. Location - You've heard it a million times, but location is a huge indicator of the success and potential of any business. A veterinary practice in a poor location will certainly damage the valuation.
  3. Staffing - A great staff provides excellent value to a new buyer, but it also boosts the goodwill value as a whole because your customers are likely to feel comfortable with that staff going forward, no matter who is in charge.
  4. Facility - Did you take the time to build a warm and welcoming environment in your veterinary office, or is it bland and intimidating? A clean, modern practice will earn a higher value.
  5. Services - Do you specialize in anything particular, or do you just offer the same services as every other veterinary office in town? Do you have a strong track record for performing those services well?
  6. Demographics - Your location and services may affect your demographics. What kind of customers are you bringing in and how long are you keeping them?
  7. Government Compliance - A practice that is out of compliance will demand extra investment to right itself. Keep this in mind if your valuation comes back low because the buyer is going to be taking on extra risk with compliance issues.
  8. Stability - A well established and stable business will always be valued higher than a business that has wild highs and lows.
  9. Real Estate - Do you rent or lease? If you lease, are the terms of that lease beneficial to a new buyer or will they be stuck in a sticky situation when they take over?
  10. Competition - Who else is around you and what are they doing? If they are outperforming you at every front, your buyer will have to exert more energy to catch up. This can hurt the valuation until your practice is better able to meet the local expectations.

These are just the top 10 factors that will influence the valuation of your practice. You can see that many of these factors are built up over time, which is why you should start preparing your practice for sale years in advance of your intended selling date. Give yourself a long runway to get all of these in order before you order an outside valuation.

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