Urgent Care Pet Clinic in San Bernardino County
For 3 years, this emergency/urgent care pet hospital in San Bernardino County California has grown due to a large referral base of 40 – 50 local general practice hospitals and clinics. A full support staff is in place, from Veterinary Technicians - including Registered Veterinary Technicians (RVT) - to Customer Support Specialists and a Practice Manager. While the hospital focuses on small animal emergency/urgent care, 1 DVM practices mixed animal medicine and will be integral in expanding that client base. Minimal competition and an excellent location place this emergency facility in a great position for continued growth.
Services include urgent care, surgery, digital radiography, ultrasound diagnostics, complete in-house IDEXX laboratory capabilities, pharmacy, and more. Located in a strip mall adjacent to a busy street and just off the main freeway (I10), the hospital has spacious facilities to house 3 exam rooms, a large open treatment area, surgical suite, radiology room, isolation room, laboratory area and approximately 30 kennels, including 2 large runs. Attending the animals are 10 Veterinary Technicians and 1 Lead Veterinary Technician (RVT). The seller is 1 of 4 DVM’s.
Growth exists in opening a second location to capture additional clients, day time operation with specialty services, or incorporating more large animal services. Either way, this is a thriving practice with a strong client base that will continue to grow for years to come.
- Location and Service Area: San Bernardino County, CA
- Number of Clients: 40 – 50 referring hospitals
- Services: Emergency/urgent care, surgery, digital radiography, ultrasound, electro-cautery, in-house IDEXX lab services, pharmacy, and more
- Building: 3,000 sq. ft. - 3 exam rooms, pharmacy, large open treatment area, x-ray room, isolation room, surgical suite, laboratory area, approximately 30 kennels
- Reason for Selling: Retirement
- Employees: 10 Vet Techs, 1 Lead Vet Tech (RVT), 1 Practice Manager, 3 Customer Support Specialists, 4 DVM’s (3 are small animal medicine, 1 is mixed animal medicine)
- Hours: Mon – Fri 6pm to 8am, Sat & Sun 24/7, and major holidays
- Seller Training Period: 90 days
- Growth Opportunities: Second location. Daytime operation with specialty services. Increased large animal services.
- Current Owner’s Responsibilities: Oversight, and 1 of 4 DVM’s
- List Price: $2,200,000
- Gross Sales
- 2017: $1,634,536
- 2016: $1,796,027
- 2015: $1,330,284
- Owner Profit/Cash Flow
- 2017: $502,116
- 2016: $554,278
- 2015: $364,113
- YOY Growth Trends: 23% increase in sales between 2015 and 2017
- Profit Margin: 31%
- Assets Included in Purchase:
- Equipment: $232,637
- Intangible Assets: Website, referral base, competitive edge, excellent location
- Inventory: $32,000
- A/R: $2,200
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
January - November
|Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$349,229||$348,325||$147,686|
|Compensation to Owner||$57,692||$60,000||$60,000|
|11% Tax on total W2 Salaries||$6,346||$6,600||$6,600|
|Interest||$22,228||$25,256||$12,280||Non-onward going expense|
|Contributions/Donations||$25,744||$580||$0||Non-onward going expense|
|Meals & Entertainment||$3,822||$1,819||$4,860||50% personal expenses|
|Auto-Personal Use||$32,097||$33,990||$19,598||90% are personal auto expenses|
|Consultant Wage||$2,579||$90,000||$140,000||Paid to owner|
|Travel||$13,895||$31,637||$8,879||Owner's personal travel|
|Replacement PT DVM||$-64,167||$-70,000||$-70,000||Part-time DVM working 2 nights/week|
|Hospital Supplies & Drugs||$52,651||$0||$0||Overbuying in 2017|
|Seller's Cash Flow = Total Addbacks + Net Income||$502,116||$554,278||$364,113|
|Profit Margin||30.72 %||30.86 %||27.37 %|
- 31% profit margin in 2016 and 2017
- $52,651 in extra supplies & drugs expense due to overbuying
- 10 FT Veterinary Technicians
- 1 FT Lead Veterinary Technician (RVT)
- Trains Veterinary Technicians, handles inventory and leads patient care
- Manages Veterinary Technicians
- Managed back office operations
- 1 Practice Manager
- Handles day-to-day operations and accounting
- Manages Customer Support Specialists
- 3 FT Customer Support Specialists
Seller is 1 of 4 DVM’s, 3 of whom exclusively practice small animal medicine and 1 practices mixed animal medicine (sheep, goats, etc.).
- Emergency/urgent care
- Surgery with fully-equipped surgical suite, including advanced ventilator system, central oxygen/scavenger system, and electro-cautery
- Digital radiography
- Hospital has an account with a remote Radiologist for further review
- Less than 5 digital films per month are sent for specialist’s opinion
- Ultrasound diagnostic
- Complete IDEXX in-house laboratory services
- Majority of laboratory work is provided in-house
- On average, 1 or 2 samples per month are sent elsewhere for advanced diagnostics
Additionally, the hospital has a great relationship with the local Police Department and contracts with local Animal Control for treatment of stray and injured pets brought to the facility by a “good Samaritan.” The contract with Animal Control is renewed yearly and has been in place for 2 ½ years, with all services being billed to Animal Control.
- Open a second location
- Hospital has minimal competition in the immediate area, with the closest competitor approximately 15-20 minutes away, which can be crucial during times of emergency
- A second location in another part of San Bernardino County or expanding into an adjacent county would increase client base
- Daytime specialty services
- Due to the lack of veterinary specialists in the immediate location, expanding the daytime hours of the practice to incorporate specialty services (i.e. Dermatology, Ophthalmology, Radiology) can not only provide added recognition of the emergency services, but also increase revenue by providing 24-hour care of critically ill patients
- Expand large animal services
- 1 DVM practices large animal medicine, such as sheep and goats
- Expansion of these services, especially to hobby farms, is a great revenue stream
- Currently these patients need to be brought to the hospital, but a buyer could consider mobile services
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 Multiplier = Price
“Cash flow” is the sum of net income plus any owner perks and non-onward going expenses.
“Multiplier” is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).
The Cash Flow for 2017 is $502,116, and the prescribed multiplier is 4.4.
With this information, the computation result follows:
$502,116 x 4.4 = $2,209,310
The List Price for the business is set at $2,200,000.
Purchase Price: $2,200,000
10%Buyer Down Payment: $220,000
15%Seller Financing: $330,000
75%Bank Loan: $1,650,000
Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $6,152.
Bank Loan 10-year term at a rate of 5.25% equals a monthly loan payment of $17,703.
After business expenses and loan payments, a buyer with a down payment of $220,000 would retain a profit of $268,014, which results in a 121% return on investment in the first year!
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $2,200,000 with the terms listed above, the coverage ratio is 1.94.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
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Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
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Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
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Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
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