How To Sell Your Veterinary Practice to Veterinary Consolidators

As a veterinary practice owner, your business is likely your pride and joy. But circumstances can arise that may lead you to want a more hands-off level of control and responsibility over your practice. 

Maybe you’re nearing retirement age, experiencing burnout, or simply wanting to take a different direction with your career. Maybe you don’t love the business administration aspect of owning a practice as much as providing great animal care. In these cases, selling your vet practice to veterinary consolidators — large veterinary groups that acquire several smaller independent veterinary practices — may be a viable path forward.  

The right consolidators could offer you more than you ever dreamed your veterinary practice was worth. Then, they’ll take care of the management side of running your practice, enabling you to take a step back and enjoy more freedom. 

But veterinary consolidation is a big step, from negotiating on price to implementing one integrated veterinary software to streamline day-to-day operations. You’ll want to make sure you approach it correctly to get the highest offer and navigate a successful sale.

The Process of Selling Your Practice to a Veterinary Consolidator

Vet consolidation has become more and more popular in the past five years. In 2021, as many as 1,000 vet owners in the U.S. sold their practices to corporate groups. By the end of 2023, 25% of all vet practices in the U.S. are expected to be consolidated. 

While some consolidators promise a quick and easy process, you should do your due diligence to identify the most responsible consolidation company and the highest offer you can get for your practice. If maintaining your branding or ensuring consistency is important to you, take your time with the selling process and gain greater confidence that the partner you choose will honor the brand and client base you spent so much time creating. 

Benefits & Challenges of Selling to a Veterinary Consolidator

If you’re ready to give up control of your veterinary clinic, consolidation could pose many benefits. Finding the right consolidator could allow you to sell your veterinary practice for much more than it may be worth on paper.

You also don’t have to completely step away from the practice; rather, you can stay on as the veterinarian-owner or in a less-intensive role if desired. But you won’t have the headache of managing finances and administrative tasks — instead, you can focus on quality pet care. 

Alternatively, some veterinary software can help manage your practice’s finances, HR/Staffing, or client engagement. Learn how Weave can assist your veterinary practice by signing up for a free demo.

Before you jump into consolidation, make sure you understand the regulations for the sale of veterinary practices in your state. Some states, such as North Carolina, New Jersey, New York, and Minnesota, prohibit the corporate practice of veterinary medicine.

This means that while corporate consolidators could oversee the administration and management of the practice, a licensed veterinarian-owner would need to stay on to manage the vet services. 

California, Florida, and Oregon have more lenient policies, only necessitating that a veterinarian-manager be on staff to oversee the practice of veterinary medicine. Meanwhile, states like Georgia, Connecticut, and Massachusetts don’t have any policies about corporate ownership. 

What to Watch Out for When Selling to Consolidators

Selling a veterinary practice is a big decision, and you shouldn’t rush into a sale if you don’t feel 100% confident. Some consolidators are pushy in their practices, but don’t feel like you need to make any rash decisions. Take time to think about what offer is best for you — more than likely, the offer will still be there when you make your decision. 

Also, be sure to validate a consolidator’s claims. Consolidators will do everything they can to get you to agree to an offer, which may include inflating their services and offerings. You should spend time researching the other vets the company has acquired to check their claims. 

Consolidators should be upfront about what they may want to change about your veterinary hospital. Will they require a larger or smaller staff headcount to keep your practice running? Are they planning to restructure your clinic in any way? You deserve to know how they will alter the practice you’ve spent years building. 

Finally, make sure you understand the role you will play once the practice ownership shifts to the consolidators. Will you need to take a step back? Will your role change at all? Can you leave the practice altogether? The right consolidator will prioritize your wants and needs for the new ownership. 

Valuing Your Vet Practice

Understanding how to value a vet clinic can help you better evaluate the offers you receive from consolidators. You can use three different approaches to value your practice:

• Income approach: Examining your cash flow to determine your exact profitability on a monthly, quarterly, or yearly basis
• Market approach: Assessing your practice value based on the value of similar practices in your area
• Asset approach: Valuing your practice’s net assets, including your tangible assets

These methods only work if you have clear, organized bookkeeping records that indicate your revenue, profits, debts, equity, and overall financial risk. Working with a veterinary appraiser can help you accurately value your independent practice to prepare for sale. 

Finding a Buyer

Consolidation has become increasingly popular, and you’ll likely have no shortage of buyers interested in your animal hospital. Instead of needing to settle for the first offer you get, you’ll have control and leverage that can help you make the most of your sale. 

Numerous consolidation companies have entered the market in the past decade, and you’ll have over 60 veterinary consolidators to choose from during your search. You’ll likely see the following consolidators come up in your research:

• Banfield Pet Hospitals (Owned by Mars Inc)
• VCA Animal Hospitals (Owned by Mars Inc)
• National Veterinary Associates (NVA)
• VetCor
• Pathway Vet Alliance
• PetVet Care Centers
• Blue River PetCare
• Southern Veterinary Partners (SVP)

Some of these organizations limit their vet practices to a specific geographical area, while others purchase independent veterinarians from across the country.

You may have already had consolidators contacting you with offers for your practice. Don’t be afraid to look outside of these initial offers — you may be able to get a better deal.

Also, consider that the highest monetary offer may not necessarily be the best choice for your practice. Other factors, such as the consolidator’s plan to maintain your practice’s reputation and workplace culture, may also impact your decision. Valuing your practice too high can also turn away potential buyers, drawing out the selling process unnecessarily.

Don’t be afraid to contact a potential partner directly and mention that you are interested in selling. Good consolidators will take the process from there.

Negotiating the Sale

Once you’ve identified one or two consolidation partners you may be interested in selling to, the negotiation process can begin.

The consolidator will officially begin the process by drafting a Letter of Intent (LOI) to indicate the initial terms of their acquisition. This letter won’t finalize anything; instead, it will lay out the terms of the sale in legal language to streamline the remainder of the process. Still, don’t sign a Letter of Intent without having a lawyer review and validate it.

Keep in mind that as an owner, you have a lot of leverage and power within the sale. Vet consolidation is hot right now, and your consolidator will likely be willing to adjust the terms to close the sale. If you want to stay on as the veterinarian-owner, work part-time providing veterinary services, or completely hand over your role as a veterinary professional, this is the time to make your wishes known.

Also, ensure that the technical aspects of the sale are legitimate. Evaluate the form of sale, which will likely either be an asset sale (transferring all tangible and intangible assets) or a stock sale (transferring the ownership of shares in the practice). Stock sales are subject to capital gains tax rates, while asset sales are subject to ordinary income tax rates.

Closing the Deal

Finalizing the sale of your practice may be bittersweet. You may look forward to more freedom and less involvement in the stressors of your practice while feeling a sense of grief over the veterinary profession you’ve dedicated so much of your life to furthering. 

When emotions arise, having a legal professional or neutral third party on your side can help you keep a level head and review the terms of the sale objectively. Some attorneys even specialize in the sale of veterinary organizations, allowing them to provide knowledgeable guidance for your sale. 

Essential Documents

The sale of your practice may involve at least four essential documents: a letter of intent, an NDA, a sales agreement, and a non-compete agreement. You may have already received a letter of intent earlier in the process, but if not, make sure you have this document at this stage. 

Before finalizing the sale, the consolidation company will go through a due diligence process in which they evaluate your practice’s finances to ensure that their offer correlates with your practice value. You can have the consolidator sign an NDA to ensure that any information they uncover during due diligence remains confidential. 

After completing this process, the consolidator will present to you a sales agreement that contains all details you agreed upon. This is the final contract you will sign before closing the sale and will cover the payment terms, warranties, conditions of sale, and representations. Be sure to read it over with an attorney so that you fully understand the terms.

Some consolidators may require you to sign a non-compete agreement as an addendum to the sales agreement to prevent you from competing with their newly acquired practice. Review the duration, geographical area, and terms before signing.

With these documents in your hands, you’ll be ready to transfer ownership to the consolidation company. 

Revealing to Your Staff

Your next step is to share the news with your vet staff. Consolidation can feel like a big change, even if the partners take every measure to maintain the same company and culture after the acquisition. Your staff may feel a sense of uncertainty or anxiety. 

You should do everything you can to ensure a smooth transition for your staff. Let them know that you took time to evaluate the consolidator and ensure that the company is a good fit for your practice. If you’re completely retiring from the veterinary industry, you may still want to make yourself available to the consolidators and your staff in the months after the acquisition should any questions or problems arise. 

Reassure your staff that the practice will still operate to the highest standard of veterinary care and that their day-to-day operations likely won’t change much. 

Of course, you’ll also need to inform any other entities that hold an interest in your practice, such as stakeholders with private equity. 

Contingencies

Speak with your attorney about adding any contingencies, or extra conditions, to the sale agreement. Contingencies can act as backup plans that give you the power to cancel the sale if certain circumstances arise. They may make you feel more confident in finalizing the sale. 

Adapting to the New Owners

Your job likely won’t be done the minute you sign the sales agreement. Instead, you can ensure a smoother transition by staying on for a few months and helping your team adapt to the new ownership. During this time, you can answer any questions, ensure that the consolidators maintain your company ethics, and ease any anxieties your staff may have about the change. 

Integrating your Practice Management Systems

One final step you’ll need to consider is integrating your current practice management system with whatever system the consolidators use. Some consolidators like to maintain similar high-level processes across their vet clinics, which often includes using one standardized practice management system. Otherwise, you may want to merge your two systems into one full-scale platform that can simplify the transition. 

Weave’s Vet Software can help your staff stay connected with pets and pet owners while navigating the transition to new ownership. You’ll be able to maintain personalized communication with clients before, during, and after their veterinary visits, reducing any attrition that may arise from the sale. 

With features like call management, automatic texting, streamlined scheduling, form generation, review management, and payment processing, Weave can help you maintain a strong client reputation during your consolidation process. Request your free Weave demo today to learn more. 

Frequently Asked Questions