The trend of veterinary practice acquisition has made owners think about the valuation of their practice. Valuation is done when the owner is planning to sell their veterinary practice, and there are potential buyers out there. When you decide to go ahead with the veterinary practice sales, it can be either an acquisition or a merger. There are several approaches to performing the valuation of your veterinary practice. But, the fundamental principle is usually the same, meaning both the seller should be able to benefit equally from the transaction.
Common Methods Used for Valuating Veterinary Practice
Here are some of the valuation methods used by potential buyers to evaluate a veterinary practice:
Income approach: this is the most common and preferred method for valuating veterinary practice. The value of the veterinary practice will depend on the profit made by the veterinary practice, and the approach concentrates on the rate of cash flow of the practice. The cash flow of the practice helps you to determine the level of risk the company undertakes and its growth prospects.
Market approach: market approach evaluates the value of the company based on the value of other similar veterinary practices in their area. However, the difficulty with this approach can be linked to the availability and accuracy of the data they get. Since most acquisitions of veterinary practices are privately completed, so it becomes challenging to assess the veterinary practice accurately.
Asset approach: this tries to determine the value of the veterinary practice’s Net Asset Value (NAV). That means how much the current veterinary practice is worth. This also factors in goodwill, which represent the fair value of the practice’s assets minus its liability market value. This is an intangible asset, and it bases its valuation on the reputation of the veterinary practices, future value, clientele, etc.
How To Sell Your Veterinary Practice
Now that you know about Veterinary practice appraisal and valuation, you may be thinking about how to sell your practice. When learning the exit strategy and how to sell your veterinary practice, you must start by asking the right questions. For instance, do you have a preferred buyer in mind? What are your available options? The answer will be different for everyone, so it is important that you consider your motivations for selling.
Some veterinary professionals in remote areas may decide to shut the door and walk away. And this may work if there is no value to the veterinary practice because the clinic is out of date, and there is no profit to be had. Here are some of the other options:
- Stay and work for a while and improve your veterinary practice sales potential.
- Sell to associates.
- Merge with another veterinarian in the area.
- Sell to a corporation.
If you need veterinary practice valuation help but are not ready for the full appraisal or jobs in veterinary medicine, Vets Best Friend will still answer any questions you may have. Feel free to schedule a consultation to discuss your particular situation or jobs in veterinary medicine.