Vet Practice Sales: Q2 Recap, New Changes & What’s Next For the Market?

June 25, 2023
What’s happening in the practice sales market in Q2 2023? We give you an insider’s peek into macroeconomic factors, new changes, buyer strategies, and more.

More about this webinar

Rich Lester, Co-CEO of Ackerman Group shares a succinct, data-driven, 30-minute outline of the economic and market conditions necessary for sellers to realize all-time high valuations again.

Topics covered:

  • Rapidly evolving macroeconomic conditions
  • How rising interest rates affect practice valuations
  • Current buyer behavior and new entrants to the market
  • The rest of 2023: What the future holds and our predictions

Your Speaker

Rich Lester

Rich Lester

Co-CEO at Ackerman Group

Read Webinar Transcript


  • Rich Lester shares his outlook for interest rates and inflation over the next six months.
  • He expects interest rates to remain between 2.5% and 3.5%, with inflation fluctuating between 3% and 4.5%.
  • He does not expect interest rates to start declining until mid-2024.

Private equity activity and pricing:

  • Private equity firms are paying more for loans to acquire veterinary practices due to rising interest rates.
  • The number of deals that private equity firms are doing in the veterinary industry is declining.
  • As a result of these factors, the value of veterinary practices is declining.

Specific examples:

  • Private equity-backed businesses like the consolidators in the veterinary industry are now paying, on average, 10% interest on their loans, up from 4% when the Fed had rates at zero.
  • Deal activity in the veterinary industry peaked in 2021 and is now declining.
  • The approximate multiples that the consolidators were sold for throughout the 2020s peaked in 2021 and are now starting to come down.
  • Individual practice multiples are following the trend of consolidator multiples and are currently around a seven or eight-turn discount to what the consolidators sell at.

Overall impact:

  • Private equity activity and pricing in the veterinary industry are declining due to rising interest rates.
  • This is likely to continue in the near term as the Fed continues to raise rates.

Other key takeaways:

  • Revenue and invoice growth have become more volatile, with a decline in visit growth in 2022 and 2023. Consolidators are now placing a premium on clinic owners who can demonstrate the ability to grow invoices and volume in a challenging market.
  • Four significant consolidators have changed CEOs in the last four months, with a shift from growth-oriented executives to those with deep operating experience in multi-site businesses. This suggests that consolidators are now more focused on optimizing revenue and profit growth at individual locations rather than simply acquiring as many clinics as possible.
  • Access to capital has become more difficult due to rising interest rates. This is putting a hold on recapitalization and sales of large consolidators.
  • Consolidators are becoming more selective about which clinics they acquire, and are focusing on those that are well-managed and profitable.
  • Clinic owners who can demonstrate the ability to grow their businesses in a challenging market are in high demand.
  • It is becoming more difficult for consolidators to raise capital, which is slowing down the pace of consolidation in the industry.
  • Clinic owners should focus on optimizing their revenue and profit growth and demonstrating this to potential acquirers.
  • Clinic owners should also consider their own financial situation and whether they have the resources to weather a downturn in the market.
  • Clinic owners should work with qualified professionals to develop a strategic plan for their businesses and to navigate the sales process if they decide to sell.
  • There has been a two-year hold on large consolidators selling their businesses due to rising interest rates and a lack of access to capital.
  • Smaller consolidators are still acquiring and growing, but some are struggling to find buyers.
  • Branded de novos are also having mixed results, with some doing well and others not so well. The key to success for branded de novos is to have a thoughtful recruiting strategy.
  • Valuations for veterinary practices have declined from their peak in 2021 but are still above historical levels.
  • Deal structures are evolving, with buyers offering less cash upfront and more contingent payments.
  • Overall, the veterinary services market is in a period of transition, with rising interest rates and a lack of access to capital impacting consolidation.
  • The percentage of cash upfront in deals is declining, and deal structures, including joint ventures, contingent notes, and top co-equity, are becoming more complex.
  • Retention is becoming more crucial, and buyers are becoming more diligent.
  • The buyer market remains robust, but the buying pool has changed.
  • The best time to sell a practice is when you are personally ready, the practice is fully staffed and fully adopted, and the market is favorable.
  • If you are a producing doctor, a buyer will likely want at least three years out of you post-closing.
  • There has been less deal volume of A+ practices, which are defined as practices with an EBITDA of $800,000 and four or more veterinarians.
  • Overall, the market for buying and selling veterinary practices is in a period of transition, with buyers becoming more discerning and deal structures becoming more complex. Sellers should be aware of these changes and plan accordingly.
  • A+ practices are in high demand, and there is a scarcity of value to them.