Selling your veterinary practice

Category: Healthcare - Posted On: Dec 12 2019


With the valuation of veterinary practices soaring in recent years, selling your practice can be an extremely attractive option to some owners. However, along with the rapidly changing taxation regime, the sale process is far more complex than ever before.

It is unlikely that selling your veterinary practice will be a decision that is made lightly, but we have highlighted areas you should consider during this process.

  • Valuation
    A valuation of a practice is highly subjective, and will ultimately be worth what someone is willing to pay for it. Veterinary practices are normally valued based on Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) and a multiplier. The EBITDA multiplier creates practice value, including goodwill and certain tangible assets for example property, included in the deal may increase the selling price further. However, in some cases there may be assets that a purchaser will not be interested in buying which will reduce the price, for example motor vehicles.
  • Potential buyer – Corporate entity
    There are a number of ‘corporates’ seeking to acquire practices across the country. Generally, an offer from a corporate will have a number of conditions attached and more often than not, include a deferred payment that will be dependent on future results. Due to this, individuals are often tied into working in the practice for the new owner for a number of years after the sale, typically 3 years. Much of the business management is removed from the responsibilities of the sellers, and so it allows the veterinary surgeons to be exactly that – vets. However, this also means the sellers will no longer have control over the running of the business.
  • Potential buyer – New partners/shareholders
    Other common buyers of a practice are vets who have worked for the practice for a number of years and have built up a good relationship with staff, pets and owners. This could involve the individual(s) buying either a share or the whole of the business. The vet(s) buying into a practice may be required to obtain a funding facility which can take some time, depending on the level of funding required. However, the process with individuals will largely be by negotiation, whereas the corporate process will be much less flexible.

There may be other third party potential buyers, which could involve a mixture of both processes above.

  • Share/Business purchase agreement
    The terms set out how and when the deal will be concluded should be drafted and reviewed by a solicitor with expertise in this area. This should also be supported by your accountant on the financial and taxation aspects.
  • Taxation
    There are a number of taxes that should be considered when selling a veterinary practice. They will include income tax, capital gains tax, and inheritance tax. Seeking tax advice before agreeing a deal for the sale of your practice is important to ensure that the structure is tax efficient for the seller (and also the buyer), and to ensure that the seller can benefit from any tax reliefs available.

If you’d like to talk to our team about any aspect of selling a veterinary practice, or would like us to assist you in the process, please contact our EQ Healthcare specialists Rachel BellKirstin Stark or email healthcare@eqaccountants.co.uk.