For many young, driven veterinarians, owning a veterinary practice is a future goal for their professional career. While creating your own startup is often appealing, there is another—perhaps even safer—route to ownership through veterinary practice acquisition.
Our team wrote the following article which has everything you need to know about buying a veterinary practice, but we understand that you may still have some questions. To ensure you have all your questions answered as you’re walking through your ownership journey, this article will answer the frequently asked questions veterinary professionals have about the acquisition process.
Who Is Buying Up Veterinary Practices?
In the current market, there are two different types of veterinary practice buyers: private owners (or owner-operator veterinarians) and corporate investors.
Corporate investors include small groups comprised of one to a few owners operating and managing multiple practices in a certain region as well as large, chain companies backed by private equity or family investment funds that seek to own dozens of practices throughout the country or continent.
Private buyers, on the other hand, range from person to person. In our experience, the typical demographic of a private buyer is a young associate veterinarian in their 30s or early 40s. It is important to note that while some lenders require only two to three years of work experience as a DVM, they often want to see at least five years of experience—meaning most private buyers are still young but also solidly established in their careers.
How Do I Know If Veterinary Practice Acquisition Is Right for Me?
Whether veterinary practice ownership and acquisition is right for you is going to depend on your own personal and professional goals. You gain significant benefits with veterinary practice ownership, including, but not limited to:
- No set ceiling for revenue generation
- The ability to create and operate on your own schedule
- A culture that’s unique to you and your practice
- Building equity
- Freedom in medicine choice and standard of care
- Picking and choosing who you get to work with
It’s important to know that almost any veterinarian can be a practice owner. However, even with all these benefits, veterinary practice ownership is not going to be for everyone. Today, most owner-operator buyers are seeking profitable practices in desirable areas in shiny new buildings with all the bells and whistles. But those willing to put in some blood, sweat, and tears to convert a cow’s ear to a silk purse will have more opportunities than those looking to purchase something perfect and new. You have to be willing to put in the hard work upfront so that you can see significant returns when you’re ready to sell.
What Are the Benefits of Veterinary Practice Acquisition over Starting New?
As we mentioned before, many aspiring, young DVMs see startups as the ideal path to practice ownership. However, while a startup may allow you to start fresh from the ground up, it can be an incredibly risky investment. A new startup practice has no holding in the community, meaning there are no regular clients to pull revenue from or reputation to build on. On top of that, you have to hire and train an entire staff by yourself. It’s not impossible—but it is risky and may lead to a slower return on investment.
However, acquiring a practice comes with a myriad of built-in benefits that can help you have a more stable transition to becoming an owner-operator. The biggest advantage is that an acquired practice already has a reputation within its community and regular clients that generate its revenue. As an acquired practice’s new owner, you inherit the practice’s reputation and clients so you don’t have to build them up from scratch. Furthermore, you’ll likely also have a fully hired staff who are already familiar with the clients, the local community, and are experienced in their field.
In other words, with veterinary acquisition, you don’t have to wait to start generating consistent revenue—the revenue is already there.
What If I Have Student Debt?
Many veterinarians who hope to own a practice feel held back by their student debt. It’s a common fear that lenders will not allow them to finance a practice due to the high student loans that come with veterinary school.
There is no need to worry. Student debt does not hinder practice ownership or obtaining the financing needed for it.
Owning and financing a veterinary practice is not the same as trying to obtain a mortgage—in fact, it’s typically much easier. Veterinary practices have a fantastic reputation in the financial industry and are seen as low-risk loans. Not only are veterinarians typically strong financial stewards and tend to be conservative in their spending, but the practice should be priced in such a way that the cash flow of the practice will not only repay the annual debt service but will also satisfy all of the buyer’s personal financial needs.
For this reason, if you have more than two years of DVM work experience, lenders will often work with you, factoring your student loan debt into the financing scenario for the practice acquisition.
What Should I Look for in a Veterinary Practice?
The first step in finding a veterinary practice for you is to consider location. Perhaps you have a specific location in mind, you’re open to anywhere, or somewhere in between—having an idea of where you want to be will help you narrow down your search.
Once you’ve decided on locations, you’ll want to consider the following factors:
- What is the practice’s revenue and how profitable is it? Is it profitable enough to cover your needs, goals, and personal financial obligations?
- What opportunities does the practice present? Do not get focused on finding the “perfect” practice; look for one that is ripe with potential.
- Is it a multi-doctor practice or a solo-doctor practice? Unless you’re the fortunate associate whose employer will sell to them or offer a partnership buy-in, you may want to consider seeking out a one- to two-DVM practice as larger, multi-doctor practices tend to be corporate targets, and those owners are usually seeking a corporate sale price which is often unattainable for an owner-operator seeking commercial financing. If you desire to have a multi-doctor practice, set that as a goal for after you’ve acquired a practice.
- What’s the reputation of the practice within its community? As we mentioned before, reputation can be a valuable asset to your success. However, one that does not have a great reputation could be a “diamond in the rough” if you have a better personality than the seller. Once the seller is no longer involved, in time, you can fix the reputation to align with your personality and culture.
- What’s the experience of the staff? Having highly trained, experienced staff can be invaluable for a new owner. On the other hand, if the current owner is doing well without an exceptionally skilled team, this could be another opportunity for tremendous upside potential.
I Am Not a Business Person. What Resources Are Available to Me?
Many veterinarians are not familiar with the business side of practice ownership and acquisition. So if you feel confused or overwhelmed by business language or practices, know that you are not alone.
At Simmons, we want veterinary practice ownership to be accessible and achievable for everyone. That’s why we provide several resources to help you navigate this journey. Firstly, on our website under our Learning Center, you can find free articles, nearby events, eBooks, and webinars on several topics, including practice ownership and acquisition, appraisals, and other management topics! Hear directly from experts in the field, and gain further insight into the business side of practice ownership.
If you want more personalized help with your journey, our Practice Watch is designed to email you new listings within your desired locations. Once you’ve found a practice you’re interested in, we offer referrals to reputable lenders and attorneys who have helped aspiring owner-operators throughout the negotiation process.
How Will Veterinary Practice Acquisition Affect My Work?
There is no one answer to how practice acquisition will affect your work. Each practice and owner is unique, so it will vary from case to case. However, you can expect that your workload may be a bit higher at first. Ownership comes with so many opportunities and benefits, but it also comes with new responsibilities, such as managing people and handling administrative tasks.
If you’re intimidated by ownership due to these tasks, remember that you don’t have to handle these responsibilities forever. As you grow and invest more into your practice, you can delegate these responsibilities by hiring new staff, such as managers and administrative assistants. Perhaps, you may even grow your practice enough to be able to hire another doctor, freeing up your workload further.
Remember, ownership can feel difficult at first, but with just a bit of hard work and perseverance, you’ll find yourself on the other side with greater returns, freedoms, and opportunities.
How Long Does the Acquisition of a Veterinary Practice Take?
If you’ve already found your practice, both you and the seller agree on all terms, and real estate is not included, you can expect to close within 30–45 days. If all previous conditions are true but real estate is included, it may take a bit longer to close—somewhere between 90 and 120 days.
However, if you’re just at the beginning of your veterinary practice acquisition journey, the time of completion will vary. Often, it can take two to three years just to find the right practice for you. However, this is not always the case. If you find a practice that works for you quickly, you could become an owner within a year. The journey is up to you and how flexible you can be in the pursuit of your own practice.
Trust Simmons to Guide You through the Veterinary Practice Acquisition Process
Simmons has been serving the veterinary community as a business advisor and broker for nearly five decades. Our team holds a deep passion for private practices and helping keep private practices in the hands of owner-operators. Whether you’ve already begun searching for a practice to acquire or you’re just considering the idea of ownership, we want to help you in your journey to veterinary practice acquisition.
The resources provided by Simmons are created for private buyers and sellers, just like you—especially our Practice Watch program. If you dream of finding your dream practice and becoming an owner, sign up for our Practice Watch today to get your personalized results sent directly to your inbox!
