It can help to have seasoned legal counsel who can address the challenges that may arise during the purchase of a veterinary practice. Get the counsel and support you need by contacting Mahan Law for a free initial evaluation with a veterinary attorney to learn more about how we can guide you through every stage of acquiring a practice.  

Benefits of Buying an Established Veterinary Practice

A veterinarian who wishes to own a practice may find certain benefits from buying an existing practice from another veterinarian looking to exit. Some of the advantages of acquiring an established veterinary practice include:

  • Existing Client Base – An existing practice will come with a client base in place, allowing a buyer to avoid investing in marketing to acquire the first clients. 
  • Existing Operational Infrastructure – A veterinarian who buys an existing practice can avoid the expense and stress of building out an infrastructure, including office location, equipment, staff, and operational procedures.  
  • Proven Business Model – An established, financially stable veterinary practice has the advantage of a proven track record of revenue and profitability, which also allows a buyer to assess the practice’s financial history during due diligence. Furthermore, a buyer assures themselves of revenue on day one of ownership. 
  • Brand Recognition and Goodwill – An existing practice may have an established community reputation that may continue to drive business to the practice. 

Structuring the Purchase of a Veterinary Practice

A buyer of a veterinary practice may structure the transaction in two ways: as an asset or equity purchase. An asset purchase involves buying most or all the assets of an existing practice, including real estate or leasehold interests, equipment, inventory, patient records, and goodwill. The buyer may agree to assume various liabilities of the practice. The seller retains any formal legal entity that owned the practice, such as an LLC or corporation. 

In an equity purchase, the buyer acquires the legal entity that operates the practice and its assets, paying the former owner for their equity interest. Equity purchases typically require buyers to assume the practice’s liabilities, although buyers and sellers can negotiate a specific allocation of liabilities. 

The two purchase structures have different legal and tax implications, depending on how buyers and sellers allocate the purchase price. As a result, buyers need experienced legal counsel to understand the tax consequences of a proposed purchase. 

Due Diligence During the Purchase Process

Any purchase of a veterinary practice should include a due diligence period during which the buyer can review the practice’s financial records, operations, and legal structure to determine a fair value for the business and identify red flags or other risks associated with the acquisition. The primary areas of due diligence should include:

  • Financial Due Diligence – A buyer should thoroughly review a veterinary practice’s financial records, including balance sheets, accounts receivable, profit-and-loss statements, and income tax returns. These records can help determine the stability of a practice’s revenue and its long-term client retention figures.
  • Operations – Due diligence of a veterinary practice’s operations should involve a review of the condition of equipment (and replacement/repair expenses), leasing costs, supplier contracts, and other service agreements (e.g., practice management software and patient record systems).
  • Legal Due Diligence – Buyers should evaluate a practice’s litigation history, insurance claims, and regulatory complaints, which may indicate future legal issues. 
  • Employment Matters – A review of employment issues during due diligence should include employment contracts, non-compete agreements for associates, and other risks associated with failing to retain staff. 

Regulatory and Licensing Considerations

Buyers of veterinary practices will have certain regulatory and licensing matters to resolve before they can close on a purchase. First, many states will require a new owner to hold a valid license to practice veterinary medicine in the state. The state veterinary board may also have rules or restrictions for practices, such as requiring owners to structure their business as sole proprietorships, partnerships, professional limited liability companies, or professional corporations.

Veterinary practices also have serious regulatory compliance obligations under DEA regulations and state controlled substances acts, as state and federal regulators require licensing for veterinary practices to possess and use controlled substances on animals. 

Do You Have to Be a Vet to Buy or Own a Practice?

In many states, laws or regulations require owners of veterinary practices to hold a license to practice veterinary medicine in that state. These laws ensure that licensed veterinarians make clinical decisions by prohibiting unlicensed individuals or corporate entities not wholly owned by licensed veterinarians from owning veterinary practices. 

How Can a Veterinary Attorney Help with Buying a Practice

A lawyer from Mahan Law can guide you through each of the steps of acquiring a veterinary practice, including:

  • Advising you on purchase structures
  • Assisting with due diligence
  • Reviewing a target business’s records to identify potential legal risks
  • Consulting on the tax implications of a purchase
  • Negotiating deal terms and drafting purchase agreements
  • Helping with regulatory and licensing requirements
  • Advising on the financing needed for the acquisition
  • Helping you develop transition plans to facilitate taking over ownership and management of an existing practice

Contact Our Veterinary Attorneys Today for Help

If you’ve identified a veterinary practice you wish to buy, you need experienced legal counsel to guide you through the complex issues that can arise during the purchase process. Contact Mahan Law today for a free, confidential consultation with a veterinary lawyer to learn more about the process of buying a veterinary practice. Our firm can help you know what to expect and avoid pitfalls that could jeopardize the success of your newly acquired practice.

Buying a Veterinary Practice

It can help to have seasoned legal counsel who can address the challenges that may arise during the purchase of a veterinary practice. Get the counsel and support you need by contacting Mahan Law for a free initial evaluation with a veterinary attorney to learn more about how we can guide you through every stage of acquiring a practice.  

Benefits of Buying an Established Veterinary Practice

A veterinarian who wishes to own a practice may find certain benefits from buying an existing practice from another veterinarian looking to exit. Some of the advantages of acquiring an established veterinary practice include:

  • Existing Client Base – An existing practice will come with a client base in place, allowing a buyer to avoid investing in marketing to acquire the first clients. 
  • Existing Operational Infrastructure – A veterinarian who buys an existing practice can avoid the expense and stress of building out an infrastructure, including office location, equipment, staff, and operational procedures.  
  • Proven Business Model – An established, financially stable veterinary practice has the advantage of a proven track record of revenue and profitability, which also allows a buyer to assess the practice’s financial history during due diligence. Furthermore, a buyer assures themselves of revenue on day one of ownership. 
  • Brand Recognition and Goodwill – An existing practice may have an established community reputation that may continue to drive business to the practice. 

Structuring the Purchase of a Veterinary Practice

A buyer of a veterinary practice may structure the transaction in two ways: as an asset or equity purchase. An asset purchase involves buying most or all the assets of an existing practice, including real estate or leasehold interests, equipment, inventory, patient records, and goodwill. The buyer may agree to assume various liabilities of the practice. The seller retains any formal legal entity that owned the practice, such as an LLC or corporation. 

In an equity purchase, the buyer acquires the legal entity that operates the practice and its assets, paying the former owner for their equity interest. Equity purchases typically require buyers to assume the practice’s liabilities, although buyers and sellers can negotiate a specific allocation of liabilities. 

The two purchase structures have different legal and tax implications, depending on how buyers and sellers allocate the purchase price. As a result, buyers need experienced legal counsel to understand the tax consequences of a proposed purchase. 

Due Diligence During the Purchase Process

Any purchase of a veterinary practice should include a due diligence period during which the buyer can review the practice’s financial records, operations, and legal structure to determine a fair value for the business and identify red flags or other risks associated with the acquisition. The primary areas of due diligence should include:

  • Financial Due Diligence – A buyer should thoroughly review a veterinary practice’s financial records, including balance sheets, accounts receivable, profit-and-loss statements, and income tax returns. These records can help determine the stability of a practice’s revenue and its long-term client retention figures.
  • Operations – Due diligence of a veterinary practice’s operations should involve a review of the condition of equipment (and replacement/repair expenses), leasing costs, supplier contracts, and other service agreements (e.g., practice management software and patient record systems).
  • Legal Due Diligence – Buyers should evaluate a practice’s litigation history, insurance claims, and regulatory complaints, which may indicate future legal issues. 
  • Employment Matters – A review of employment issues during due diligence should include employment contracts, non-compete agreements for associates, and other risks associated with failing to retain staff. 

Regulatory and Licensing Considerations

Buyers of veterinary practices will have certain regulatory and licensing matters to resolve before they can close on a purchase. First, many states will require a new owner to hold a valid license to practice veterinary medicine in the state. The state veterinary board may also have rules or restrictions for practices, such as requiring owners to structure their business as sole proprietorships, partnerships, professional limited liability companies, or professional corporations.

Veterinary practices also have serious regulatory compliance obligations under DEA regulations and state controlled substances acts, as state and federal regulators require licensing for veterinary practices to possess and use controlled substances on animals. 

Do You Have to Be a Vet to Buy or Own a Practice?

In many states, laws or regulations require owners of veterinary practices to hold a license to practice veterinary medicine in that state. These laws ensure that licensed veterinarians make clinical decisions by prohibiting unlicensed individuals or corporate entities not wholly owned by licensed veterinarians from owning veterinary practices. 

How Can a Veterinary Attorney Help with Buying a Practice

A lawyer from Mahan Law can guide you through each of the steps of acquiring a veterinary practice, including:

  • Advising you on purchase structures
  • Assisting with due diligence
  • Reviewing a target business’s records to identify potential legal risks
  • Consulting on the tax implications of a purchase
  • Negotiating deal terms and drafting purchase agreements
  • Helping with regulatory and licensing requirements
  • Advising on the financing needed for the acquisition
  • Helping you develop transition plans to facilitate taking over ownership and management of an existing practice

Contact Our Veterinary Attorneys Today for Help

If you’ve identified a veterinary practice you wish to buy, you need experienced legal counsel to guide you through the complex issues that can arise during the purchase process. Contact Mahan Law today for a free, confidential consultation with a veterinary lawyer to learn more about the process of buying a veterinary practice. Our firm can help you know what to expect and avoid pitfalls that could jeopardize the success of your newly acquired practice.