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Veterinary Market Trends Beyond 2023: What Does the Future Hold for Sellers?
Yes, the veterinary transactional market is thriving! Of course, we’re on the lookout for trends to help veterinarians gain an edge in this finicky market. There were a host of challenges, however, that led to a vet practice valuation bubble in 2021: pandemic-era, industry-wide staffing shortages, combined with a high number of veterinary visits, contributed to inflated value.
As a result, there are more Dr-to-Dr sales this year, as corporations are wary of an uncertain market. There are significant changes in veterinary transactions and practice ownership, so let’s take a closer look at the current veterinary market trends and offer predictions for the future.
The Aftermath of the Veterinary Valuation Bubble 2021
Remember March 2020? Yes, that was when the global COVID-19 announcement hit the news outlets. We started working from home; this new reality put many more people in the market for pet adoption. This was a perfect scenario for pets — they had their owners’ full care and attention 24/7.
However, this also caused more veterinary visits: growth was around 1% annually vs. 7% in 2021 due to COVID-19. The veterinary industry was booming, with adoptions rising, particularly from high-income households. This was a “once-in-a-lifetime” opportunity for veterinary professionals to sell their practices.
The COVID-19 demand bubble pushed pricing, and selling during Q3 2020 – Q2 2021 was especially lucrative. In late 2021-early 2022, valuations peaked because interest rates were at an all-time low; as a result, the veterinary industry experienced growth of unprecedented levels.
Will there ever be another demand bubble? This is tough to predict. But we can give you some time-tested advice for selling your practice.
When is the Perfect Time to Sell My Veterinary Practice?
If you are a veterinary practice owner nearing retirement or just want to sell, you may be wondering what to do. When is the best time to go through with this transaction?
While there isn’t a one-size-fits-all answer to this question, there are specific ways to help you decide when to sell:
- Are you ready to retire now, or are you planning to in the near future?
- How is the current market situation?
- How is your practice performing?
- If you’re looking to sell, do you feel ready to proceed with that transaction if the right offer comes through?
In an ideal scenario, the answers to these considerations would align; however, depending on your situation and current veterinary market trends, there are advantages and disadvantages to selling your practice.
If you’re a 60+-year-old veterinary professional, you should be aware that the sale process can span a year or more. Considering the current shortage of veterinarians, if you’re bringing a considerable profit to the practice, you may be under obligation to work for 2 or 3+ more years. Why? Veterinarians are hard to replace, so buyers prefer them to stay on for some time.
Are Solo Practices Easier to Sell?
As a result of these trends, it is clear that solo or one-doctor practices are easier to sell. What created the opportunity for these transactions? Corporations are steering clear of buying one-doctor practices; furthermore, corporate buyers are only showing interest if the veterinarian willing to sell is younger.
Solo practices with over $1M in revenue and strong real estate holdings are a great opportunity for buyers–they can add more doctors and make the practice profitable without too much investment. Another strong indicator of potential practice success is researching the location and the potential of that practice’s growth.
Today, solo companion animal hospitals are in the range of 4-6x EBITDA. Another thing to remember is that offers now include more “structure” and less up-front cash. In other words, the contract involves continued work arrangements for veterinarians. All of these considerations show why it’s important to hire a professional broker with experience in veterinary practices.
For over two decades, PS Broker has been the broker to engage if you are a solo practitioner. We believe veterinary ownership is currently in the hands of independent buyers. Are you thinking of selling your veterinary practice? You’ve found the perfect team.
Read and listen to testimonials of our clients:
- PS Broker Was There for Me From Day One
- PS Broker Provided Clear Steps for Selling Our Veterinary Practice
- PS Broker Was Trustworthy and Sensitive to Our Needs
Selling your veterinary practice? Read on:
- How to Sell Your Vet Practice Stress-Free
- Finding Identity After Retiring as a Veterinarian
- Advantages of Working with a Boutique Veterinary Sales Partner
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