Valuation Methods for Veterinary Practices: Legal Implications

Selling a veterinary practice is complicated. From evaluating the pros and cons of selling, to identifying potential buyers, when it comes to selling a practice, every step is important. However, of all these steps, valuation may be the most important. If you price your practice too low, you miss out on significant financial compensation. And if you price it too high, you limit the pool of potential buyers. In other words, arriving at an accurate value of your practice can make or break your transaction. In this article, we examine valuation methods for veterinary practices. 


A common valuation method for veterinary practices is known as EBITDA, which stands for the following:

  • Earnings before interest
  • Taxes
  • Depreciation
  • Amortization 

Typically, appraisers apply the EBITDA after making adjustments to a veterinary practice’s income statement. This ensures that the value arrived at is a meaningful and accurate figure. Specifically, this method indicates a practice’s operating profit and financial soundness. And the higher the profit, the higher the sale price of the practice will be. In addition, by including amortization and depreciation as well as debt payment costs and taxes, the EBITDA method attempts to represent the cash profit that is generated by the organization’s operations.


Next, a party who is appraising a veterinary practice examines two other key areas. The first of these is the owner’s SDE, which stands for seller’s discretionary earnings. This is calculated by combining the EBITDA with the practice owner’s benefits and income. And the second of these is the practice owner’s net income, which defines the practice’s earnings after all the practice’s expenses have been deducted.

Additional Valuation Factors 

In addition to those issues discussed above, there are a variety of other factors to consider when valuing a veterinary practice, many of which can have legal implications. As opposed to valuation methods like EBITDA, several of the other valuation factors are somewhat subjective, making it difficult—if not impossible—to value your practice without the assistance of one or more qualified professionals. Ultimately, arriving at an accurate value of your practice will determine the success of the transaction. Therefore, if you are considering selling your practice, you should contact an experienced veterinary attorney for assistance. 

Contact Our Experienced Veterinary Attorneys 

If you are a veterinary practice owner and considering selling your practice, you need an experienced veterinary lawyer on your side. At Mahan Law, we will use our significant legal knowledge and vast network of co-counsel attorneys to help facilitate the sale of your veterinary practice. Whether you need help identifying potential buyers, valuing your practice, or taking any of the other key steps required to sell your practice, our lawyers will strive to ensure that your transaction is a success. Please contact us today to arrange a consultation with one of our talented veterinary professionals.

Avoiding Common Pitfalls in Veterinary Practice Acquisitions

As a veterinarian, purchasing your own practice can be a dream come true. However, if you fail to avoid missteps during the process, it can quickly become your worst nightmare. So, if you are looking to acquire a veterinary practice, you must ensure that you do so in a way that gives you the greatest odds of success. In this article, we discuss how to avoid common pitfalls in veterinary practice acquisitions. 

Pitfall #1: Failing to Conduct Due Diligence

Due diligence, in layman’s terms, is the legwork one must do before making an important business decision. So, in the area of veterinary practice acquisitions, due diligence involves evaluating all aspects of a practice, including its reputation, finances, internal workings, and client retention. In other words, when considering a practice for purchase, you should leave no stone unturned. And although it may be tempting to rush through the process, particularly if you believe the practice is an excellent deal, it’s in your best interests to take your time to ensure that you aren’t overlooking any issues that may come back to haunt you in the future. 

Pitfall #2: Failing to Have the Right Team Around You

Acquiring a veterinary practice is one of the most important business decisions you’ll ever make. However, it is also a complicated process. Therefore, before attempting to purchase a veterinary practice, you should assemble a strong team. If you fail to have the right team around you, you’ll undoubtably overlook important details that can negatively impact the transaction. Your advisory team, at a minimum, should consist of an experienced veterinary practice acquisition attorney and an accountant. 

Pitfall #3: Failing to Consider All Assets 

Finally, when acquiring a veterinary practice, you also purchase all its assets, including furnishings and patient records. The seller typically provides a list of assets to the buyer prior to the sale for review. However, as the purchaser, you shouldn’t trust this list. Rather, you should tour the facilities and view the inventory for yourself. By considering all assets and inspecting them yourself, you and your team will be in a better position to arrive at a fair offer price. 

The Bottom Line

Veterinary practice transactions are complicated, and any mistakes made during the process can be costly. Therefore, if you are planning on acquiring a veterinary practice, you need an experienced team on your side, including a knowledgeable acquisition attorney. When you hire an experienced acquisition attorney to assist you, he or she will take the steps necessary to ensure that your transaction is conducted properly and that you obtain the best deal possible.

Contact an Experienced Veterinary Practice Acquisition Attorney

At Mahan Law, our experienced acquisition attorneys are here to help ensure that you avoid the many pitfalls inherent in the veterinary practice transaction process. If you are interested in purchasing a veterinary practice, our experienced veterinary team will take the steps necessary to give you the best odds of success. Please contact us to arrange an initial consultation with an experienced veterinary practice acquisition attorney.