Current Trends For Veterinary Practice Buyers
Since Omni started in 2004, we have sold well over 300 practices. Prior to approximately seven years ago, the majority of the practices had been sold to individual veterinarians buying their own practices. The past seven years, most of our sales have been to corporations. They have been paying big bucks to acquire practices. They have been paying associates handsomely to work in those practices. But is the trend flipping again back to individual buyers?
Corporate buyers have always told us that they want to acquire large practices with two or more doctors working in the practice. They have been doing that successfully. So well, that it’s hard to find a multi-doctor practice that isn’t owned by a corporation. I know, there still are some, but a lot of them have been gobbled up by the big guys. And they’ve paid a multiple of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) ranging from a low of 6 to as high as 20 (or more) in certain cases. One of the requirements for the sellers is that they stay in the practice and commit to work for anywhere from 2 to 5 years in their practice after it’s sold depending on what’s been negotiated. Here’s where the corporates are now realizing what happens when the doctors are done with their commitment. The selling doctor may retire completely. The corporate then needs to get another associate. Associate veterinarians are not easy to find these days. Thus, the rush to open up a few more veterinary schools. So, that leaves them with a practice with one less doctor if they can’t find an associate.
Here’s another trend we are seeing. Some of the smart, entrepreneurial younger veterinarians, in their 40’s and 50’s for example, who sold their practices and have fulfilled their commitment to a corporation are now back on the market looking for a practice. They got tired of some of the corporates telling them which supplies and equipment to use and, in some cases, even which procedures to perform. (Yes, I know, they’re not supposed to dictate clinical work, but some do).
As I previously stated, corporations have been passing up on acquiring the majority of the solo doctor practices. We see lots of practices with only one veterinarian collecting a million dollars or more, booked out a month or two, working six days per week and they just can’t find, or afford an associate. Some of these practices, if they had two doctors, would quickly grow to collect $1.5 to $2.0 million. Those practices are prime acquisition targets for the solo doctor who sold to the corporate, has practice management skills, can retain the selling doctor, and quickly grow the practice. They can potentially then sell the practice in a year or two to a corporate as they now have a multi-doctor practice if the seller stays on. Or, they can hold onto the practice and reap the cash flow from the now two-doctor practice.
Note to the young buyers out there that have been out of veterinary school for 3 to 5 years, you can do this too! The seller has the experience of running a practice. Many that we speak with are willing and want to stay on to mentor the buyer and help run the practice, they’re just getting tired and want to cut back a few days. Most love being a veterinarian and want to continue the clinical aspect of veterinary work. They just want to pass on the management to the buyer and work less days. So, the opportunity is ripe for veterinarians who are tired of working for a corporation and want to own your own practice. You don’t even have to sell to a corporate. You can hold onto it and make it your own practice for years to come and be proud of what you’ve built, or the legacy you’ve carried on.
There are a lot of great solo-doctor practices out there waiting for a buyer to come along. The potential is both lucrative and gratifying to the buyer and the seller. You don’t need to work in a corporate environment the rest of your life. You can enjoy your freedom and work in your own practice. The choice is yours.
We’re always just a free phone call away and happy to help in any way we can.
