There are many factors that go into determining the value of a veterinary practice, but we wanted to share a few that we feel are the most important.
Location - A practice that is located in a quality location positively impacts the value of a veterinary practice. However, one’s opinion on the quality of a location is, of course, relative depending personal preference. Because of the general preferences, a practice in a medium-large sized metropolitan area will realize increased value as compared to a practice that is located in a smaller rural town.
Area of Town - If the practice is located in a bad area of town, or in a location with poor visibility, this will negatively impact the value of a veterinary practice. On the other hand, if the practice is located in a highly visible area or a prestigious area of town, it will positively impact the value of a veterinary practice.
Practice - Profitability and clinical reputation impact the value of a veterinary practice. If a practice has a bad clinical reputation, or low profit, value will be negatively impacted. On the other hand, if it is a profitable practice with a great reputation, it will positively impact the value of a veterinary practice.
Equipment - Practice value is positively impacted by good equipment that has been recently purchased and can be utilized in the future. Practice value is negatively impacted by old equipment that causes potential buyers to conclude that they will have to replace the equipment in the future.
Potential - The number of new patients coming into a practice influences the value of a veterinary practice. The new patients show the growth trajectory to potential buyers. The number of procedures being referred out, or not offered, also impacts value. If the practice refers out certain treatments that a potential buyer intends to offer, the new buyer can plan on immediate growth in practice collections. The same thing can be said if the practice’s fees are below average for the community. If those fees can be brought up to the community average, collections can likewise increase.