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All Appraisals are Conducted in an Environment of Confidentiality

TPSG brokers are experts in the veterinary profession. Our group includes licensed veterinarians, owners, brokers, attorneys, and appraisers. We understand the marketplace and bring diversity and expertise to ensure the process runs smoothly and fairly.  Our valuation methods rely on standard business and industry methodology that result in fair values that can be relied on by both sellers and buyers.


A Few Key Aspects of Our Valuation Process

  • Review practice financials and trends
  • Valuate the surrounding community
  • Study demographics and area veterinary hospital density
  • Analyze payroll data and staff longevity
  • Equipment and recent capital upgrades
  • We examine production reports and revenue by category

Common methods used to determine a value:

  • Asset valuation
  • Capitalization of income valuation
  • Owner benefit valuation
  • Multiplier or market valuation

Asset Valuation

Asset valuation is used when a company is asset-intensive. Retail businesses and manufacturing companies fall into this category. This process takes into account the value of the fixed assets.  This is often appropriate for startups, smaller offices or those with little to no profit.

Capitalization of Income Valuation

This method places no value on fixed assets such as equipment, and takes into account a greater number of intangibles. This valuation method is best used for non-asset intensive businesses like service or professional businesses.

Owner Benefit Valuation

This formula focuses on the seller’s discretionary cash flow and is used most often for valuing businesses whose value comes from their ability to generate cash flow and profit. To broadly outline the synopsis of the process you multiply the owner benefit (once determined)  times “X”to get the market value. The multiplier takes into account standard figures such as return on investment, a living wage equal and debt service.

Multiplier or Market Valuation

This approach finds the value of a business by using an “industry average” sales figure as a multiplier. This industry average number is based on what comparable businesses have sold for recently. As a result, an industry-specific formula is devised, usually based on a multiple of gross sales. This is where some people have trouble with these formulas, because they often don’t focus on bottom line profits or cash flow. Additionally they don’t take into account how different two businesses in the same industry can be.

Once the valuation process by TPSG is completed, we proceed to market. There the practice is presented to buyers in a consistent and organized marketing book. Advertising is clearly of critical importance and this is why national, regional, and local advertising is undertaken.

We use our buyer database to put qualified buyers with sellers in their respective geographic areas. All sales are handled with the utmost confidentiality for both seller and buyers.

After a fair sales price is negotiated with the buyer, the process moves forward, and we provide the following key assistance and information:

  • Help with legal and document support
  • Finding financial loan assistance for the buyer
  • Overcome any obstacles during negotiations and closing
  • Arranging and helping to ensure a smooth practice transition process for practice takeover
  • Helping buyer or seller find appropriate legal financial and accounting professionals if needed
  • Getting all parties to the closing table in an orderly time frame

The most critical aspect in determining the fair market value of the veterinary practice is choosing the appropriate valuation method for an appraisal.  Whether its the capitalizing excess earnings method or the discounted economic income method or some other method, our team understands and has worked with all the popular appraisal methods.  We can help guide you through the process.

Fair market value means the cash price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of all the relevant facts.  Fair market value, therefore, assumes no specific buyer or seller.

Valuing a practice requires an in-depth analysis of the practice’s historical operations.  It also requires the appraiser to evaluate the likelihood of future operations continuing at a similar level of profitability, since a buyer of such a practice is purchasing not only the practice’s assets but also the future stream of income which these assets may generate.

There is no single valuation method that can be applied to all practices.  Therefore, the appraiser must consider many different factors as well as the financial information for the practice.  The most difficult asset to evaluate is good will.  Goodwill is a generic term used to describe a practice’s intangible assets.  It includes the value of the practice as a going concern (the benefit of having the equipment, client list, staff, patient records, etc. already assembled and functioning); the reputation of the clinic and its doctors within the community; the right to practice general veterinary medicine; and perhaps the opportunity to work in one or more specialties as well.  The presence of goodwill is indicated by earnings which exceed a normal return on invested capital.

In order to arrive at the precise price for a practice, the entire practice and all factors and variables must be considered. This requires access to accurate practice financial data.  Our expertise and experience will ensure your practice is valuated correctly, fairly and at an optimum sales price.


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