Veterinary Practice Appraisal
Accurate practice valuation requires insight into the veterinary profession, financial expertise, and business intelligence. A professional veterinary appraisal uses sophisticated, industry-standard methodology.
At Simmons, we not only use the most up-to-date standards for practice appraisal, but we are also continually involved in the further development and refinement of those standards.
Getting the most accurate veterinary practice valuation
Many veterinary brokers, both large and small, offer a fast, free valuation of your practice. Unfortunately, an accurate valuation takes the valuable time and experience of an expert.
The advisors at Simmons take the time to perform a thorough and detailed valuation. We focus on the veterinary industry exclusively, and have four decades of experience brokering veterinary practice transitions. This level of immersion gives us the perspective necessary to provide accurate and detailed valuations.
We take pride in our sterling reputation for providing accurate veterinary practice valuations. In fact, Simmons has more credentialed business appraisers than any other firm.
Not sure if you’re ready? If you’re thinking of selling but aren’t ready to undertake a full valuation, we’re still here to answer any questions you may have. Contact your Simmons advisor for a complimentary consultation.
When to get a veterinary practice valuation
Preparing to sell your practice: It is advisable to have a valuation done three to five years before you actually plan to sell your practice. A valuation sets a baseline for your practice value, and can illuminate areas that need attention. With one of our exceptionally accurate valuations, advanced planning, and the advice of an experience Simmons advisor, you can make adjustments over time that will boost your practice‘s total value prior to putting it on the market.
Practice management and planning: Another rapidly expanding use for practice appraisals is as a foundation for veterinary practice management and various strategic planning programs. Because a practice appraisal assesses the risks and profitability of the veterinary practice, the practice appraisal is recognized as a superior management tool and is an integral component of several management-related programs such as:
- Exit strategy planning
- Monitoring the efficiency of long-range planning programs
- Measuring the veterinary practice’s ability to create value.
Practice ownership changes: The practice appraisal is a detailed process that establishes a value for a practice at a specific point in time. The practice appraisal is an important and highly informative initial step for any type of transfer of ownership, such as:
- Veterinary practice sale transactions
- Associate buy-ins
- Partnership buy-ins
- Merging two practices
Other situations: While performing veterinary practice appraisals for transaction purposes remains the primary reason for appraisals, there are other non-asset transferring reasons which require a practice appraisal, such as:
- Tax court disputes
- Legal procedures—marital dissolution, partnership disputes, etc.
How we evaluate veterinary practices
As the first and most experienced veterinary practice brokerage, Simmons uses progressive practice valuation methods to determine an accurate value. We don’t follow the outdated method of a percentage of gross income, because it doesn’t give a true representation of the practice’s past and future earnings performance. Instead, we use a more precise income-based approach that determines value by capitalizing earnings.
Many factors combine to determine a practice’s value. While numbers largely determine the sale price, Simmons considers many other factors that will ultimately affect the value and price. Simmons will examine:
- Practice profitability
- Net cash flow
- Practice growth
- Transferability of income to a new owner
- Client loyalty
- Geographic location
- Facility appearance
- Community goodwill
- Value of tangible assets
- Quality of employees
- The exiting owner’s transition timeline
As part of our practice valuation process, we determine net cash flow using tax returns and considering adjustments for owner compensation and perks, capital improvements, one-time expenses, and those unrelated to daily practice operation. Next, we determine the practice’s value by applying appropriate income methods of valuation to the earnings.
“I could not picture this sale occurring without your assistance. In addition, I would have never accurately assessed our practice value without your expertise.”
~ Mark Mathusa, DVM
Before reaching our final opinion of value, we also consider the following “sanity tests”:
- Does the practice’s price fit our company’s extensive market data and experience based on four decades of practice sales statistics?
- Does the price provide an appropriate personal income for the new owner?
- Does the price allow for a reasonable return on the buyer’s investment?
- Are the price and terms such that the buyer will be able to obtain commercial financing?
Contact your area Simmons office to get started on the most accurate veterinary practice appraisal available.