Two Clinic Veterinary Practice - 7 DVMs
Located in a city with a high companion pet population, this veterinary practice has two clinics, each with full-time veterinarians, vet techs and other staff. There are two owners, each with their own clinic, working in partnership to serve clients. the practice focuses on companion animals and does not treat large animals.
Clinic 1 has a staff of 15 - 4 full-time vets, 5 full-time and 1 part-time vet techs, 3 full-time and 2 part-time receptionists and a full-time Office Manager who also does the bookkeeping for both clinics. Clinic 2 has a staff of 9 – 2 full-time vets, 3 full-time vet techs, 3 full-time receptionists and 1 part-time Office Manager. The vet techs and receptionists are cross-trained. Combined veterinary experience is 75 years, and many employees have been in their positions for 5 or more years (one for 26!).
Services provided include well care, vaccinations, spaying and neutering, dentistry, radiology, ultrasound, pharmacy endoscopy, dermatology and nutrition. Both clinics are open 8-5:30 Monday-Friday and 9-4 on Saturdays. Clinic 1 is 1,400 sq. ft. and Clinic 2 is 1,583 sq. ft.
Growth opportunities include additional marketing and expanding into more niche services to be more of a “one stop shop for pet owners. Transition and training period are negotiable. Both owners would consider staying on part time if desired.
- Years in Business:
- Clinic 1: 35+
- Clinic 2: 15
- Location and Service Area: Alberta, Canada
- Clinic 1 is in a more established area (contributing to its longevity
- Clinic 2 has a younger clientele
- Services Provided: Include vaccinations, spaying and neutering, dentistry, radiology, ultrasound, pharmacy, endoscopy, dermatology and nutrition
- Clinic 1: 1,400 sq. ft. for $3,071/mo.
- Clinic 2: 1,583 sq. ft. for $2,989/mo.
- Reason for Selling: Retirement
- Clinic 1: 15 (4 FT vets; 5 FT vet techs, 1 PT vet tech, 3 FT receptionists, 2 PT receptionists; FT Office Manager (also serves as bookkeeper for both clinics);
- Clinic 2: 9 (2 FT vets; 3 FT vet techs; 3 FT receptionists; 1 PT Office Manager)
- Hours: M-F 8-5:30, Sat 9-4 (both clinics)
- Seller Training Period: Negotiable
- Growth Opportunities: Additional marketing; expand into additional niche services to be a “one stop shop” for pet owners
- Current Owners’ Responsibilities: Two owners – each practicing veterinarians (one in each clinic), both are responsible for less than 20% of production
Financial Highlights (*All amounts in Canadian Dollars)
- List Price: $3,100,000
- Gross Sales: (Fiscal Year May 1 – April 30)
- 2017: $2,279,496
- 2016: $2,247,855
- 2015: $2,295,870
- Cash Flow:
- 2017: $564,207
- 2016: $491,692
- 2015: $574,241
- Assets Included in Purchase*
- Equipment: $173,002 which includes surgery, anesthetic and dental equipment, endoscopes, centrifuge, blood chemistry analyzer (both clinics combined)
- Intangible Assets: Reputation and word-of-mouth referrals
- A/R: $11,268 (both clinics combined)
*amounts may vary
Cash Flow Analysis
- Consistent Year-Over-Year Gross Sales
- 25% Profit Margin
- Well care
- Spaying and neutering
- Additional marketing
- Expand into additional niche services
- Current staff does not “specialize” because clinics take a collaborative approach
- However, staff could pick areas of practice they enjoy and cultivate those services for the group
Clinic 1: 15 employees
- 4 full time veterinarians
- Vet Techs
- 5 FT
- 1 PT
- 3 FT
- 2 PT
- Full time Office Manager
- Also serves as bookkeeper for both clinics
Clinic 2: 9 employees
- 2 FT veterinarians
- 3 FT vet techs;
- 3 FT receptionists;
- Part time Office Manager
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, the 2017 Cash Flow was used with a prescribed multiple is 5.5. With this information, the computation is as follows:
$564,207 x 5.5 = $3,103,138
The Fair Market Value found above positions the business List Price at $3,100,000.
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