Selling a Veterinary Practice in San Francisco

Who Is Buying Veterinary Practices Right Now?

The buyer pool has three broad groups. Corporate consolidators buy practices to build regional networks. Private equity groups back those networks or build their own. Individual veterinarians buy a practice to own one.

Corporate and private equity buyers usually value on EBITDA and pay more for larger practices with several doctors. A single doctor practice is more likely to sell to an individual vet using an SBA loan, a seller note or both.

Each group wants a different thing from you after closing. That is why comparing offers on price alone tends to mislead.

If You Are the Top Producer, Plan for That First

In many practices the owner is also the busiest doctor. Buyers look at production by veterinarian, and if most of it carries your name, they see revenue that could walk out the door with you.

There are two ways to handle it. You can shift cases toward associates in the year or two before a sale, so the numbers show the practice working without you.

Or you can accept that the buyer will ask you to keep practicing for a set period, often with part of the price tied to how revenue holds up.

Your pay also needs to be split correctly when the books are recast. A buyer replaces you with a salaried doctor, so your compensation as a clinician is a real cost, separate from your return as owner.

A practice that runs well on the days you are off is the one buyers compete for.

Associates Decide Whether the Deal Holds

Associate veterinarians can be hard to hire, and buyers know it. A practice with stable associates who plan to stay is worth noticeably more than one that depends on new hires.

Corporate buyers often want employment agreements with key associates signed before closing. Some offer retention bonuses. You will need to decide when to tell your doctors and how much to share.

Telling them too early creates risk if the deal slips. Telling them too late can leave a buyer with no time to win them over. The usual answer is after a signed LOI and before final diligence.

Owning the Building Changes the Conversation

Many practice owners lease. If you do, the remaining term and the landlord's consent to assignment will be checked early. Read our guide on assigning your commercial lease before you list.

If you own the building, you have choices. You can sell it with the practice, keep it and become the buyer's landlord, or sell it separately to an investor.

Some corporate buyers prefer to lease rather than own. Keeping the real estate can turn into a steady income stream, but the new lease must be at market rent, or the buyer will adjust the price to match.

Rollover Equity Is Part of Many Offers

Private equity backed buyers often ask the seller to keep a minority stake in the larger company. That stake can be worth more later, or less. It is not cash.

Read the terms with care: what you own, who controls a future sale, and what happens if you leave. Your CPA should model the after tax result of each offer, since California taxes the gain heavily at the state level.

Our page on valuing a business explains how the cash and the contingent pieces of an offer should be compared.

Expect to Stay Longer Than You Planned

A transition period is standard. With an individual buyer it may be a few months of introductions and handoff. With a corporate buyer it can be a multiyear employment agreement.

California generally does not enforce noncompetes, but it allows one for a seller who sells the goodwill of a business. Expect a buyer to ask for a reasonable one covering a set radius and time.

Think about what you want your working life to look like after the sale, then judge each offer against that. Our overview of selling a San Francisco business covers the wider steps.

For a confidential first look at what your practice might bring, fill out the estimate form or call (415) 555-0163.