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Ann Arbor Area Vet Practice w/49% Profit Margin

CASH FLOW
$371,886

Specifications

  • Price
    $1,800,000

  • Revenue
    $956,234

  • Profit Margin
    39%

  • Location
    Jackson/Ann Arbor area

  • Equipment
    $240,000

  • Inventory
    $19,000

  • Service Area
    Wide radius around clinic

  • Account Receivable
    $2,000

  • Reason for Sale
    Exit strategy

  • Employees
    5: Vet (1), Tech (1), receptionists (2), kennel (1)

  • Intangible Assets
    Well-respected clinic, good social media reviews, reliable staff, large client base with many new clients annually, long-term clients

  • Lease
    4,200 sq. ft.: reception, exam rooms (3), pharmacy/lab, accessible restrooms, kitchen, office (2), treatment room, surgery, radiology room, isolation, kennel room, break room. The building and land are for sale outside the sale of the business.

Excellent care, a large client base, and increasing sales are hallmarks of this dynamic and efficient vet clinic.  Serving clients within a wide radius of the Ann Arbor/Jackson, Michigan area, this clinic has 4,200 square feet of space including 3 exam rooms, a lab, a radiology room, treatment room, surgery, isolation, break room, and pharmacy.  Over $240,000 in equipment enables this clinic to handily rise above the competition.  Working with only 4 staff members in addition to three veterinarians, this is a streamlined operation. 

 

Focused on veterinary care for dogs and cats, the clinic offers general care, dental services, surgery, digital radiology, and prescriptions through their pharmacy.  In addition, there is a boarding room with space for 9 dogs and 7 cats earning over $20,000 annually. 

 

The owner of this business is currently practicing an average of 25 hours per week.  The second veterinarian works an average of 22 hours per week.  The owner would also like to stay on for 1-3 years after the sale, fostering confidence in the transition and aiding the new buyer in continuing high-quality services.

 

Business Highlights

  • Year Established: 2000
  • Location:  Jackson/Ann Arbor area
  • Service Area: Wide radius around clinic
  • Clients: Dogs and cats
  • Customers:  4,000 active clients of all ages and income levels from a wide radius from the clinic
  • Services: General vet services, dental cleanings, surgery, radiology, pharmacy, counseling, boarding
  • Building: 4,200 sq. ft.: reception, exam rooms (3), pharmacy/lab, accessible restrooms, kitchen, office (2), treatment room, surgery, radiology room, isolation, kennel room, break room.  The building and land are for sale outside the sale of the business.
  • Reason for Selling: Exit strategy
  • Employees:  3 Vets, 1 Tech, 2 Receptionists, 1 Kennel 
  • Seller Training Period: Seller will remain on staff for 1-3 years, or as negotiated
  • Growth Opportunities: Increase hospital/doctor hours, add emergency services, increase radiology, increase boarding, increase marketing
  • Current Owner’s Responsibilities: Veterinarian 20 hours/week

Financial Highlights

  • List Price: $1,800,000
  • Gross Sales:
    • 2018: $956,234
    • 2017: $825,062
    • 2016: $687,330
  • Cash Flow:
    • 2018: $371,886
    • 2017: $215,825
    • 2016: $173,187
  • Assets Included in Purchase*
    • Equipment: $240,000: General, surgical, and radiological vet equipment including digital x-ray
    • Inventory: $19,000
    • A/R:  $2,000
    • Intangible Assets: Well-respected clinic, good social media reviews, reliable staff, large client base with many new clients annually, long-term clients

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnNotes
2018201720162015
GROSS SALES$956,234$825,062$687,330$689,419
Net Income Shown on Financial Statement$258,773$117,818$101,191$133,223
ADDBACKS
Other unrelated Salaries$16,800$22,000$19,538$16,783
11% Tax on total W2 Salaries$15,957$14,628$11,731$7,896
Depreciation$0$305$436$565
Rent$25,400$25,400$25,400$25,400Onward going rent would be $64,600/year
Lawn Care$1,330$1,573$1,632$1,658
Internet$862$640$750$737
Pet Expenses$994$861$656$1,095
One-Time Improvements$667$0$2,197$1,300
Cell Phone$1,430$1,663$1,625$1,655
Auto-Fuel$3,666$3,159$3,752$2,005
Health Insurance$8,619$7,740$6,545$7,832
Simple IRA$3,851$3,780$5,351$2,219
Compensation to Owner$128,260$110,981$87,106$55,000
Replacement$-94,723$-94,723$-94,723$-94,723
TOTAL ADDBACKS$113,113$98,007$71,996$29,422
Seller's Cash Flow = Total Addbacks + Net Income$371,886$215,825$173,187$162,645
Profit Margin38.89 %26.16 %25.20 %23.59 %
.

Typical Clients

  • 2,000 active clients
  • 5,000 clients in the database
  • 293 new clients in 2018 Jan. – Oct.
  • 313 new clients in 2017

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • General care
  • Dentistry
  • Radiology
  • Surgery
  • Pharmacy
  • Boarding

Employees

  • 3 Veterinarians
  • 1 Technician
  • 2 Receptionists
  • 1 Kennel/Assistant

Growth Opportunities

  • Increase doctor/hospital hours 
  • Include emergency services 
  • Increase radiology offerings 
  • Increase boarding

Valuation Details

The Firm Business Brokerage used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

For this business, a 2018 cash flow was used with a prescribed multiple is 4.9.  With this information, the computation is as follows:

$371,886         x          4.9       =          $1,822,241

The fair market value found above positions the business list price at $1,800,000.

 

*The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

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The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.