Determine Your Practice’s True Worth
At Simmons, we take a comprehensive and modern approach to veterinary practice valuations, ensuring accuracy and precision in determining your practice’s true worth. Unlike outdated methods that rely on a percentage of gross income, we use an income-based approach that capitalizes earnings to reflect both past performance and future potential. Our thorough evaluation considers numerous factors, from profitability and growth to client loyalty and employee quality, all aimed at providing you with a realistic and reliable valuation. Here’s how our process sets us apart and ensures you get the most accurate value for your practice.
Accurate Veterinary Practice Valuations
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 We don’t follow the outdated method of a percentage of gross income, because it doesn’t give an accurate representation of the practice’s past and future earnings performance.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 examines:
- 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.
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 veterinary 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?
