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Opportunities

Vet Practice – No Production by Owner

CASH FLOW
$368,403

Specifications

  • Price
    $2,330,000

  • Revenue
    $2,252,719

  • Account Receivable
    $50,000

  • Location
    Topeka - Lawrence, Kansas area

  • Service Area
    Northeastern Kansas

  • Profit Margin
    16%

  • Equipment
    X-ray, surgical equip., vet stations, computers, pharmacy equip., crematory

  • Inventory
    Supplies, food, medicine

  • Reason for Sale
    Exit strategy

  • Employees
    25: 4 Vets (2FT, 2PT), 3 reception and back staff, 1 scheduling, 1 narcotics tech, 13 assistants, 3 FT kennel staff

  • Lease
    10,000 sq. ft.: Receptions, 5 exam rooms, dental room, surgery room, rainbow bridge room, radiology, 6 offices, boarding area; Building is available for continued lease

  • Intangible Assets
    Well-respected clinic and surgery center, diverse client base, knowledgeable cross-trained staff, family-like atmosphere

Located in Northeastern Kansas, this veterinary clinic and hospital provides general care, surgical and dental services, and has plenty of space for boarding!  Fully equipped, the two part-time vets and two full-time vets serve dogs and cats alike.  With an exceptional surgical suite, as well as separate rooms for dental procedures and hospitalization boarding, specialty procedures are common and easily handled by this well-qualified team. 

 

Services include general vet care, general and specialty surgical services, dental cleaning and oral surgical work, rainbow bridge transitions and cremation, as well as boarding for both cats and dogs.  There are over 50 slots for boarding alone with an additional 20 slots for hospitalized boarding.  Boarding animals is certainly an area for continued growth, especially hospital boarding, special needs medical boarding, and contracted boarding for other vets. 

 

Due to the unique scheduling at this location, vets work a wide range of hours, providing excellent care with some extended hours.  Currently operating with two part-time vets and two full-time vets (with one vet starting in the summer of 2019), this practice has the capacity to hire two additional full-time vets to meet customer demands and improve the efficiency of service delivery. 

 

The owner currently works full-time overseeing the operations of the clinic.  The owner is not currently responsible for any production revenue but does manage the office as well as patient care advocacy.  The owner would like to remain a valuable and active part of the team for two to five years after the transition.  Duties such as inventory ordering and day-to-day management can be assumed by the current staff as needed. 

Business Highlights

  • Year Established: 2002
  • Location and Service Area: Topeka - Lawrence, Kansas area
  • Number of Clients: Wide demographic client base
  • Animals: Dogs and cats
  • Services: General veterinary care, surgery, dental care, boarding (over 50 slots with 20+ additional hospital slots), cremation
  • Building: 10,000 sq. ft.: Receptions, 5 exam rooms, dental room, surgery room, rainbow bridge room, radiology, 6 offices, boarding area; Building is available for continued lease
  • Reason for Selling: Exit strategy
  • Employees: 25: 4 Vets (2FT, 2PT), 3 reception and back staff, 1 scheduling, 1 narcotics tech, 13 assistants, 3 FT kennel staff
  • Hours: Standard with some extended hours
  • Seller Training Period: Seller will stay on for 2-5 years
  • Growth Opportunities: Hire additional vets, increase hours, increase boarding clients, build upon cremation business, capitalize on current resources
  • Current Owner’s Responsibilities: Daily oversight and patient advocacy – No production

Financial Highlights

  • List Price: $2,330,000
  • Gross Sales:
    • 2018: $2,252,719
    • 2017: $2,286,974
    • 2016: $2,409,765
    • 2015: $2,385,121
  • Cash Flow:
    • 2018: $368,403
    • 2017: $390,327
    • 2016: $461,343
    • 2015: $415,363
  • Assets Included in Purchase*
    • Equipment: X-ray, surgical equip., vet stations, computers, pharmacy equip., crematory 
    • Inventory: Supplies, food, medicine
    • A/R: $50,000 average due to in-house financing
    • Intangible Assets: Well-respected clinic and surgery center, diverse client base, knowledgeable cross-trained staff, family-like atmosphere

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
2018201720162015
GROSS SALES$2,252,719$2,286,974$2,409,765$2,385,121
Net Income Shown on Financial Statement$207,005$254,899$242,111$216,901
ADDBACKS
Compensation to Owner$40,810$40,464$100,550$90,150
11% Tax on total W2 Salaries$6,266$4,451$11,061$9,917
Depreciation$0$0$930$1,896
Interest$16,316$19,750$34,125$25,245
Simple IRA$300$1,214$3,017$2,7052% company match
Health Insurance$20,632$20,632$20,632$20,632$1,719.36/month for personal insurance
Non-Business Telephone$2,964$2,964$2,964$2,964$247/month for personal lines
Auto Expense$2,253$2,253$2,253$2,253Personal expense
Rent$44,000$32,000$32,000$32,000Ongoing rent $100k/year
Equipment Lease$11,700$11,700$11,700$11,700Ended 2018
Other unrelated Salaries$16,157$0$0$0
TOTAL ADDBACKS$161,398$135,428$219,232$199,462
Seller's Cash Flow = Total Addbacks + Net Income$368,403$390,327$461,343$416,363
Profit Margin16.35 %17.07 %19.14 %17.46 %
  • Profit margin 2018: 16%

Typical Clients and Services

Typical clients are from a diverse demographic base. 

  • Serving dogs and cats

Services:

  • General veterinary care
  • Surgery
    • Laser
    • Traditional
  • Dental care
    • Cleanings
    • Surgical cases and extractions
  • Boarding
    • General
    • hospitalized
  • End of Life
    • Transition
    • Cremation

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

Employees

  • Veterinarians
    • 2 Full-time
    • 2 Part-time
  • Reception
    • 3
    • Reception duties are cross-trained with back staff
  • Scheduling
    • 1
  • Narcotics Tech.
    • 1
  • Cross-trained assistants
    • 13
  • Kennel staff
    • 3 Full-time

Growth Opportunities

  • Hire additional vets 
  • Increase hours 
  • Increase boarding clients 
  • Build upon cremation business 
  • Capitalize on current resources including hospitalized 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 2017 cash flow was used with a prescribed multiple is 6.33.  With this information, the computation is as follows:

$368,403         x          6.33     =          $2,331,991

The fair market value found above positions the business list price at $2,330,000.

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