As a veterinary practice owner, making all the decisions about your business has probably become second nature. If you’re considering entering into a joint venture (JV) as part of your sale process, you should think carefully if it’s the right fit for your specific situation. If it is right for you, finding the right partner is essential. Those that find JVs to be ‘for them’ are owners who are ready and willing to share decision-making power, believe in collaborative growth, and have hospitals that are positioned for expansion. More below.
What makes Rich Lester an expert on this topic?
– Founder + CEO of a corporate buyer
– 16+ years in the veterinary space
– Dozens of practice transactions
What is a joint venture (JV)?
In the veterinary world, a joint venture is formed when a corporate buyer purchases a majority stake in your practice, usually anywhere from 55 to 80 percent of the business. As the current owner, you retain the remaining 20 to 45 percent of the practice. This arrangement makes you a minority partner, sharing ownership and collaborating with the corporate buyer in managing the business.
This type of transaction structure is becoming more widely utilized because it better aligns incentives post-closing, especially given the doctor shortage. We have seen a number of corporate buyers that used to only buy 100% of a practice begin to utilize the joint venture structure in the past two years.
of practices sold by Ackerman Group in 2024 featured a joint venture in their deal terms. This percentage is rising in 2025.
When does a joint venture make sense to pursue in a veterinary practice sale?
Joint ventures aren’t suitable for every practice owner, and luckily there are other structures you can explore as well. But in our experience, JVs are most beneficial under the following conditions:
- Continuing to Practice for Several More Years: You’re ready to sell, but you want to continue practicing for at least four more years. Why have the buyer own 100 percent of your hard work over your remaining working life when you can share in the growth and upside?
- Multiple Owners with Different Retirement Timelines: Your practice has multiple owners with different retirement horizons. Joint ventures work when there is an older partner and a younger partner who wants to keep practicing. The older, retiring owner sells while the younger owner becomes the joint venture partner.
- Small Practices with Strong Potential: You’re a one or two-doctor practice with strong revenue or demographics that are able to attract corporate buyers. In these instances, to garner corporate buyer interest will typically involve entering a joint venture to mitigate the risk of the small number of doctors at the hospital.
- Rapidly Growing Hospitals: Your hospital is growing fast, where continuing to participate in a JV makes financial sense.
Case Study:
Dr. Anjanette Cabeza
- Employed a joint venture deal structure
- Exceeded her local broker’s value estimations
- Achieved expansion/renovation plans with her buyer
I’m considering a joint venture for my practice sale. What questions should I be asking?
Before committing to a joint venture, it’s critical to ask the right questions to ensure your interests are protected. Joint ventures work in different ways depending on the buyer and their business model.
What decision-making power will I have?
Do you, as a minority owner, have any decision-making power? The legal documents in a JV generally give a lot of control to the buyer. However, practically speaking, you have more informal and hands-on control as the on-site leader than what those legal documents define. Understanding both the contractual decision-making power as well as the informal or day-to-day power is an important due diligence point for any seller considering a joint venture.
What does the management fee structure look like?
Buyers generally charge fees for services like accounting, HR, vendor contracting, recruiting, and more. Is the buyer charging you fees for their services? And if so, what’s the fee structure? How does it impact your share of profits? What services are included and excluded from the management fee?
Do I have put or sale rights?
This question helps you understand your options for selling your remaining ownership stake. When can you sell your ownership, and in what circumstances? Is your ownership sale solely reliant on the buyer’s recapitalization (sale), or do you have a right to sell at other times? How much control over exit timing do you have? Does the buyer have a right to require a sale of the remaining JV portion at your retirement or at a future point in time? How is the valuation determined? Getting these answers will help you especially with long-term planning.
What are my responsibilities moving forward at the veterinary practice?
Clearly define your role post-sale. What is your day-to-day role at the practice once you’re a minority partner? Are you still supporting the practice manager on staffing and people issues, or does the buyer handle this? Are you the medical leader? We recommend establishing your roles and responsibilities upfront, before finalizingthe JV.
When can I expect to receive profit distributions?
As a minority owner in the practice, there should be regular profit distributions to you. How frequently do these distributions occur? What level of reporting and what metrics are provided on the hospital’s performance? What level of reporting is required to determine earnings and valuation at exit?
In today’s market, there are more and more corporate buyers that offer some form of joint venture or ‘synthetic’ joint venture. The answers corporate buyers give to the questions above will vary.
What's your practice worth?
- Includes an accurate profitability analysis, tangible improvement areas, and so much more.
- Sources past transactions data to give you realistic sale price expectations in today’s market.
Leadership Doesn’t End After Selling Your Veterinary Practice!
A final important note whether you enter a JV or sell 100 percent of your practice: After closing, you are still the on-site leader that staff will look to day-in and day-out. Like we mentioned earlier, in this leadership role, you have an important level of informal control and authority that may not be defined in any legal documents. Plus, with the current veterinarian shortage, you are likely irreplaceable — buyers know this and want to keep you motivated. These two factors work to your advantage, where collaborating well with your joint venture partner will usually lead to decisions that you agree with and will benefit the practice’s growth.
After the sale occurs, it’s in every party’s best interest to maximize the practice’s growth and profitability, since this will determine everyone’s profit distributions and future sale price. Keep this information in mind regardless of your practice’s sale structure.
Know Your Goals for Your Veterinary Practice Sale
Joint ventures can work well for all parties in the right situation. The decision to pursue a JV is made much easier if your goals are clear. For those who are unsure how long they want to work post-Closing, we usually encourage you to consider a joint venture to maximize the number of buyers interested in your practice and so you can explore all options. Joint ventures are more complex to navigate than a 100% sale since, in a JV, you’re taking on some level of risk by retaining ownership. As a seller, it’s critical to consult an experienced advisor who understands the nuances of the various business models when considering a joint venture.
Ackerman Group guides veterinary owners in customized corporate practice sales. To learn more about what we do, or to receive guidance tailored to the sale of your practice, contact us to get started.
Explore every option for your practice sale, let Ackerman Group guide you through joint ventures and beyond.