Is Your Animal Hospital Ready to Sell?

Engage a veterinary-focused CPA to produce three full years of P&L statements, balance sheets, and cash flow statements that are free of commingled personal expenses. Buyers and SBA lenders will not accept tax returns alone — especially if personal vehicle expenses, family payroll, or non-business travel are buried in operating costs. Your CPA should prepare a formal add-back schedule that clearly documents and justifies each owner benefit added back to arrive at Seller's Discretionary Earnings or adjusted EBITDA.

Identify and remove personal auto leases, personal health insurance charged to the practice, family member salaries for non-working relatives, and any personal subscriptions or travel. Document each with a clear narrative. Heavy or unexplained add-backs invite buyer skepticism and can cause SBA lenders to disallow certain adjustments, reducing the loan amount a buyer can qualify for.

Produce an aged AR report and write off any uncollectible balances older than 90 days before going to market. Buyers will discount AR-heavy practices or those with significant third-party insurance billing risk. If your practice accepts CareCredit or pet insurance reimbursements, document the volume and average reimbursement lag so buyers can accurately model working capital needs.

If your practice operates a wellness plan program — monthly subscription preventive care packages — quantify the deferred revenue liability and document the per-plan cost of services owed. Buyers will ask for this in due diligence, and surprises here frequently cause deal retrades. Know your active enrollment count, average monthly fee, and estimated remaining service obligations per plan.

Request a self-audit of your DEA Schedule II–V controlled substance logs, including purchase records, dispensing logs, and biennial inventory records. Any discrepancies between purchased quantities and dispensed or on-hand quantities are a serious red flag for buyers and their counsel. DEA registration is not automatically transferable — the buyer must apply for a new registration, but a clean compliance history is required for a smooth transition. Engage a veterinary compliance consultant if you have any gaps.

Verify that your practice license, all associate veterinarian licenses, and any specialty or facility permits are current, in good standing, and carry no disciplinary history. Request a formal certificate of good standing from your state veterinary medical board. Buyers will order these records independently, and any unresolved complaints or prior sanctions will require written explanation and legal review.

Ensure your OSHA hazard communication program, radiation safety logs (for practices operating digital X-ray or CT equipment), anesthetic gas monitoring records, and employee safety training documentation are current and organized. Buyers — particularly PE-backed platforms — conduct formal OSHA compliance reviews as part of their acquisition checklist and will price in remediation costs if records are missing.

Pull your current lease and verify the assignment clause. Many commercial leases require landlord consent for assignment in a change-of-control transaction. Contact your landlord 12–18 months before your target close date to pre-negotiate assignment rights, confirm remaining term, and secure renewal options. If you own the real estate, obtain a current commercial appraisal and decide whether to sell the building with the practice or structure a sale-leaseback. Lease issues are among the most common causes of veterinary deal delays.

Buyers — especially SBA-financed individual vets and PE consolidators — heavily discount practices where the selling veterinarian produces more than 50% of revenue. If you are personally responsible for 60–70% of production, begin actively shifting cases to your associates, expanding associate appointment availability, and introducing new associates if needed. Track production by provider monthly so you can show a documented downward trend in owner dependency over 12–18 months.

Compile signed employment agreements for every associate veterinarian, licensed veterinary technician, and practice manager. Confirm that non-solicitation and non-compete clauses are in place and enforceable under your state's law. Buyers will want to see that key clinical staff are contractually retained and that there is no risk of mass departure following ownership change. If any agreements have lapsed or were never executed, remediate before going to market.

Create written standard operating procedures for your highest-revenue service lines — wellness exams, surgical prep and recovery, dental procedures, and diagnostic workflows. This demonstrates that your practice can operate without your personal institutional knowledge and gives an incoming buyer or associate the tools to maintain quality of care. Buyers evaluate whether the practice is a system-dependent business or an owner-dependent job.

Buyers will ask for trailing 12-month staff turnover data. If you have chronic difficulty retaining licensed veterinary technicians or have open associate positions, begin remediation now — review compensation benchmarks, improve scheduling flexibility, and document your retention efforts. A fully staffed practice with stable technician retention is materially more valuable than one with visible staffing gaps that a buyer must immediately address with capital and management attention.

Create a complete equipment register listing every major capital asset: anesthesia machines, digital radiography systems, ultrasound, in-house laboratory analyzers, dental units, surgical suites, and monitoring equipment. For each item, record the purchase date, purchase price, current condition, last service date, and estimated remaining useful life. Buyers will commission their own equipment inspection, but walking in with a clean register signals operational discipline and prevents surprise deductions from the purchase price.

Identify any equipment that is beyond its useful life or visibly degraded — aging anesthesia machines, outdated lab analyzers, or HVAC systems in a facility you own. Decide whether to replace these items before going to market (improving valuation) or disclose them transparently with a credit. Buyers who discover deferred capex during due diligence without prior disclosure will use it as leverage for a price reduction far greater than the actual replacement cost.

Pull a report from your practice management software (Avimark, Cornerstone, ezyVet, etc.) showing your active patient count defined as patients with at least one visit in the trailing 18 months. Segment by species, service type, and average annual spend. Document your wellness plan enrollment count and monthly recurring revenue. Buyers will model client retention risk as a core component of their valuation — the stronger your data, the more defensible your revenue forecast and the tighter the buyer's risk discount.

Hire a broker or M&A advisor with direct experience selling veterinary practices in the $1M–$5M revenue range — not a generalist business broker. A veterinary-specific advisor understands how to position your practice to both PE consolidators and individual DVM buyers, knows current market multiples, can prepare a quality of earnings memo, and will manage the buyer process to prevent the leverage shift that occurs when sellers negotiate directly with sophisticated PE acquirers.

Buyers — especially PE consolidators — will require the selling veterinarian to remain in a clinical role for 1–3 years post-close, either as a contracted associate or under an employment agreement tied to an earnout. Clarify in advance how many hours per week you are willing to work, your compensation expectations, and your timeline to full exit. Misalignment on post-close roles is one of the most common reasons veterinary deals fall apart after LOI.

Confirm whether your practice qualifies for SBA 7(a) financing, which unlocks a broader pool of individual DVM buyers who can offer all-cash-equivalent terms with 10–15% equity down, a seller note of 5–10%, and a 10-year loan term. If targeting PE consolidators, understand earnout structures — typically 20–30% of purchase price tied to 2-year EBITDA targets — and negotiate hard on the definition of EBITDA and what management fees or allocated costs the consolidator can charge to your practice post-acquisition.

Compile a comprehensive seller disclosure package including three years of financials with add-back schedule, DEA and licensing documentation, equipment register, lease documents, employment agreements, wellness plan metrics, and active patient count data. In competitive processes, sellers who deliver a pre-packaged QofE summary — even an informal one prepared by your CPA — reduce buyer due diligence timelines and signal confidence in your numbers, which reduces the risk premium buyers embed in their offers.