Whether you are buying or selling a veterinary practice, determining its value is critically important. Given the challenges associated with veterinary practice valuations, it is essential to work with a knowledgeable veterinary attorney.
At Mahan Law, we provide comprehensive legal services to veterinary professionals nationwide. We leverage our knowledge of practice valuations and an understanding of regional markets around the country to help our clients engage in successful transactions.
We regularly collaborate with a wide range of valuation professionals with expertise in the veterinary space to arrive at fair and accurate practice valuations. You can trust our legal team to help you achieve your objectives. Contact us today to arrange a consultation.
Reasons for a Veterinary Practice Valuation
There are several reasons for determining how much a veterinary practice is worth, including:
- Purchase and sale – The most common reason to value a veterinary practice is for a purchase or sale. The owner needs to know how much profit they will derive from selling the practice while the buyer needs to know what price to pay.
- Partnership insurance – It is critically important to have partnership insurance when a partner leaves, retires, or dies because it helps the remaining practice owners secure their share of the total value. A veterinary practice valuation will accurately determine each partner’s share.
- Qualify for a loan – If you apply for a business loan, some or all of your practice may be used as collateral, so it’s important to know its fair market value.
Valuation Methods for a Veterinary Practice
Generally, there are three methods for valuing a veterinary practice – the income approach, the market approach, and the asset approach.
The Income Approach
This approach is an assessment of both the practice’s past earnings and projected revenue, based on cash flow and capitalization. The income approach helps to determine the practice’s present and future value, growth prospects, and level of risk. This is the most commonly used and preferred valuation method for a business, including a veterinary practice.
The Market Approach
The market approach is an analysis of recent business sales in the same geographical area, based on size, duration, and market risk. Veterinary practice acquisitions are typically private transactions, so reliable data can be hard to come by. Therefore, using this approach may not help you arrive at an accurate practice valuation.
The Asset Approach
This is an analysis of the net asset value of the veterinary practice that considers both tangible and intangible assets, including goodwill, which is based on the reputation of the owner, the practice’s clients, and the value of future business.
Factors That Contribute to the Value of a Veterinary Practice
There are several factors that play a key role in valuing a practice, such as:
- Practice size – A veterinary practice that is owned by or employs multiple veterinarians is typically more valuable than a sole practitioner clinic.
- Location – Practices that are located in metropolitan areas are valued higher than practices in rural areas mostly due to business volume.
- Specialty – Because small practices are often more marketable than large veterinary clinics, small veterinary practice valuations are typically higher.
- Assets – Most veterinary practice sales are asset sales rather than stock sales, which means that a veterinary practice with state-of-the-art equipment will be more valuable.
- Market position – A well-established veterinary practice generates considerable goodwill, which bolsters client profitability and retention, leading to higher valuations than the industry norm.
Ultimately, it takes an experienced veterinary attorney to arrive at a fair and accurate practice valuation.
How Mahan Law Can Help
At Mahan Law, we are highly experienced in valuing veterinary practices for buyers and sellers as well as practice owners who are seeking to secure funding. When you meet with us, you will work directly with a capable veterinary attorney who will help you determine an accurate practice valuation.
Lead Attorney Anthony Mahan has assembled a team of seasoned professionals who are focused on the veterinary space. By working with a respected network of valuation experts, veterinary brokers, real estate professionals, and lenders, we will dedicate our resources to helping you achieve success. Our services include:
- Negotiating and preparing transaction documents (s.g. Letter of Intent, purchase and sales agreement)
- Conducting due diligence
- Arranging financing
- Representing clients at closing
In addition, we also provide ongoing counsel through our veterinary consultation and retainer plans. Our flat fee retainer plan covers all of your practice’s legal needs and avoids hourly billing for phone calls, emails, contract review, legal drafting, governmental compliance, risk management, and other relevant issues. Ultimately, our retainer plans allow us to build a long-term working relationship so that you can maximize the value of your veterinary practice.
Contact Our Experienced Veterinary Practice Valuation Attorney
At Mahan Law, we know that buying, selling, or financing a veterinary practice hinges on determining an accurate valuation. Let our team of accomplished veterinary attorneys and valuation experts handle all the details so you can focus on providing your patients and the communities you serve with quality veterinary services. Contact us today for a consultation.