If you own a veterinary practice, you have likely been approached by at least one Corporate Consolidator wanting to talk to you about purchasing your veterinary practice. It seems like almost every day a new group is becoming Veterinary Corporate Consolidators.
In today’s veterinary market, selling a practice has become far more complex than it was a decade ago. Corporate consolidators (CC) — from long-standing giants like Veterinary Centers of America (VCA) and National Veterinary Associates (NVA) to a wave of newer groups — are expanding rapidly and approaching practice owners with offers that can look attractive but often come with strings attached. While some veterinarians see these deals as the perfect way to “cash out” or reduce the burden of management, others worry about what will happen to their staff, clients, and long-term legacy after the sale.
Not every consolidator values a practice the same way, and not every offer is as good as it seems. One may prioritize $1.0M+ in gross revenues, another the number of Doctors of Veterinary Medicine (DVMs) on staff, while others focus on location or specialty services. Understanding how corporate buyers operate — and knowing the right questions to ask before you sign — can make the difference between a decision you feel confident in and one you regret.
Understanding Corporate Sales
Consolidators do not typically pay fair market value, they will pay “Investment Value”.
Fair market value is the value of a practice with a willing seller, buyer, and a fair exposure to the whole market. This is often the value an individual DVM could afford and receive financing to purchase.
Investment value is what it is worth to that particular buyer (either an individual or a CC). Each Consolidator will perceive a practice’s value differently based on their particular “wheelhouse”. Things like profitability and revenue are usually very high on their list, but other aspects like location and local market also come into play.
If your practice is in a market where the Corporate Consolidator needs an anchor practice or there is already another anchor practice that the company owns nearby and they want to expand, they may consider acquiring a nearby practice regardless of size or profitability.
Some Corporate Buyers will offer to buy 100% of the practice and may (or may not) require an employment agreement from the seller. Others may only want to purchase part of the practice, preferring to create a partnership with the owner.
With many differences and nuances among selling to Corporate Consolidators, what should an owner do if approached to sell? First, don’t jump on your first offer too quickly. Take a deep breath and do some research.
Questions to Ask Before You Sell to a Corporate Consolidator
1. Is the Consolidator offering a fair price or is there still some money on the table?
An owner should know the fair market value of his or her practice and should also know what the current CC market is like in their area. A Consolidator will sometimes offer more than fair market value for a hospital, but this is not always the case. An owner should know these values, knowledge is always power.
2. Why is the Corporate Consolidator interested in my practice? Size, profitability, location, DVMs, all of the above?
This may be difficult to determine unless you have some knowledge about the Corporate Buyer but, depending on the circumstance, there may be value added to the practice if it suits a specific need of the CC.
3. Does the Consolidator want to fundamentally change my practice?
Some sellers are indifferent as to what happens after the keys are handed over, but this is not always the case. A practice is a part of the owner, and many are concerned about what will become of their employees and clients after a handoff. Some Corporate Consolidators will change the practice’s philosophy, while others prefer to improve the practice behind the scenes.
4. Will my employment be a requirement of the purchase? If so, for how long and under what terms?
This is very important to many practice owners, especially those who aren’t ready to retire but want to relieve some of the burdens that come with practice ownership. Many want to start retirement as soon as possible. Often the Consolidator needs to have the previous owner around for some time post-sale to help create a smooth transition with both staff and clients. The terms of employment are negotiable but need to be discussed before accepting any offer.
5. Is this a good Corporation to consider, and what is their reputation like with other sellers?
If possible you should speak with recent sellers as well sellers from years past. Not all Consolidators are the same and unfortunately not all work and play well with others, it’s a good idea to ask around before you spend too much time talking to anyone CC.
6. What terms will the Corporate Consolidators offer when purchasing the practice?
There have been 100% cash deals that many like to leverage with a partial seller note and/or some stock. Stock options have become more and more common in recent years, and now most transactions include some form of cash, stock, and/or a partial buy-out with a resulting partnership.
7. Will the Consolidator buy my real estate?
Some CCs will not purchase your practices real estate (RE) because they need the option to combine practices down the road, and some do not mind owning the RE. There are options regarding whether you want to sell or lease. Therefore, negotiating the RE is just as important as the practice negotiations.
8. Could other Corporate Consolidators be interested in my practice? If so, might there be a better deal out there?
Why would anyone accept the first offer without determining if it is the best offer? If one CC has shown interest in a practice, it is highly likely other offers are available. Another Consolidator may offer more money and/or better terms that might be a better fit for you (the seller). It is important to explore all of your buyer options before selling your veterinary practice.
Partnering for a Better Sale
Answers to the above questions can be elusive, even knowing where to look is a challenge. Considering this is a constantly changing market, owners would be wise to seek help from a professional with experience in corporate veterinary practice sales.
Selling your veterinary practice is one of the biggest financial and personal decisions you’ll make, and while corporate consolidators are only one option, their offers can sometimes be hard to ignore. These buyers typically base their price on “investment value,” making it difficult for an individual Doctor of Veterinary Medicine (DVM) — often an associate — to compete, since they must rely on fair market value financing. With more consolidators entering the market and purchase activity on the rise, it’s critical to know your practice’s fair market value, understand employment and real estate terms, and explore multiple buyers before making a decision. Having up-to-date knowledge and expert guidance ensures you get the best outcome.
At Simmons Veterinary Practice Sales and Appraisals, we’ve guided countless veterinarians through the complexities of corporate sales, helping them negotiate favorable terms and protect the legacy of their practices. If you’ve been approached by a consolidator or are simply curious about your options, contact Simmons for expert advice.
