Your 12 Point Checklist To Buy a Veterinary Clinic

Are you a vet wanting to own your own practice? Or an investor looking to get into the veterinary industry? Whatever your background, if you’re buying a veterinary clinic in Australia you’re in the right place.

This guide will walk you through everything you need to know before you make this big investment.

1. The Veterinary Industry in Australia

The veterinary industry in Australia is big and growing. As at 2021 there were over 3,200 veterinary businesses in the country and over 12,000 registered vets. The industry has proven to be resilient even in times of economic downturn, with a 4.1% compound annual growth rate between 2016 and 2021.

IBISWorld reports the veterinary services industry in Australia generated $3.6 billion in 2021 with a 2.4% annual growth over the next 5 years.

This is driven by:

1. Rising pet ownership

2. Greater awareness of animal health and welfare

3. Advances in veterinary medicine and technology

4. Increased disposable income to spend on pet care

With all this in mind buying a veterinary clinic can be a great investment. But you need to approach this with caution and research.

2. Why Buy a Veterinary Practice?

Before we get into the nitty gritty of how to buy a veterinary clinic, let’s first understand why this might be a good idea for you. Here’s why:

1. Professional autonomy: You get to practice veterinary medicine your way.

2. Financial returns: A good clinic can provide a steady and profitable income.

3. Community benefit: As a clinic owner you’ll have the ability to make a big impact on animal health in your local community.

4. Career progression: Clinic ownership is a natural career step for many vets.

5. Investment: For non-vet investors a clinic can be a good addition to an investment portfolio.

6. Work life balance: Running a business comes with its challenges but owning your own clinic can give you more flexibility in your work schedule.

You may choose to buy into an existing practice, purchase a whole existing practice, or set up a new practice from scratch.

3. Market Research: Know the Local Veterinary Market

Before you start looking at specific clinics to buy, you need to know the market you’ll be operating in. This means researching:

1. Demographics: The population in your area, age distribution, income levels, pet ownership rates.

2. Competition: Other veterinary clinics in the area, their specialties, pricing, reputation.

3. Local economy: Employment rates and business growth.

4. Pet ownership trends: Local pet ownership statistics and pet care spending trends.

Consider where the clinic sits in relation to busy shopping centers, rural areas, or specific towns, as this can impact client base and growth potential.

As of 2019 61% of Australian households have pets, with dogs being the most common (40% of households) followed by cats (27%). This high pet ownership rate means a big market for veterinary services, particularly a small animal practice.

1. Zoning: Research local zoning laws that impact veterinary clinics.

2. Growth: Any planned developments in the area that will impact the business.

Researching the market will help you find good locations and understand the pros and cons of different areas.

4. Financial Planning For Vet Practices

Buying a veterinary clinic is a big investment. Here are the financials to consider:

1. Purchase price: This can be anywhere from a few hundred thousand to several million dollars depending on the clinic’s location, size, equipment and profitability. Be prepared to invest big.

2. Business Acquisition Financing: Look into financing options, bank loans, seller financing or partnerships. As business finance brokers we can help you find the best loan options. 

3. Revenue and profitability: Review the clinic’s financials for the last 3-5 years. Look at trends in revenue, expenses and profitability.

4. Cash flow: Understand the clinic’s cash flow patterns. Veterinary clinics have seasonal fluctuations in income.

5. Debt and liabilities: Know of any existing debts or financial obligations that come with the practice.

6. Valuation methods: Learn about the different ways to value a veterinary practice, asset based valuation, earnings multiple or discounted cash flow.

7. Tax: Get a tax professional to advise on the tax implications of the purchase and ongoing operations.

8. Insurance: Factor in the cost of insurance policies you’ll need, professional indemnity and public liability.

Careful financial planning is crucial to ensure the long-term success of your investment.

Average annual revenue for a veterinary clinic in Australia was around $1.1 million in 2021. But this can vary greatly depending on location, size and specialisation of the practice.

Remember, while the financials are important, they shouldn’t be the only consideration. A clinic with good financials but poor equipment or a bad reputation might not be the best choice in the long run.

5. Legal and Regulatory

Buying and running a veterinary clinic in Australia involves navigating the legal and regulatory landscape. Here are the key areas to consider:

1. Business structure: Decide on the best business structure for your veterinary practice (e.g. sole trader, partnership, company). Each has different legal and tax implications.

2. Licences: Make sure you have all the necessary licences and registrations. In Australia, veterinarians must be registered with the Veterinary Board in their state or territory.

3. Accreditation: Consider getting accredited with the Australian Veterinary Association (AVA). While not compulsory, it can add to your clinic’s credibility.

4. Compliance: Get to know the relevant laws and regulations including:

• • Veterinary practice acts

  • Animal welfare laws

  • Controlled substances regulations

  • Workplace health and safety regulations

  • Privacy laws for handling client data

1. Contracts: Review all existing contracts, lease agreements, employee contracts and supplier agreements. You may need to get legal advice to transfer or renegotiate these.

2. Insurance: Get the right insurance cover, professional indemnity, public liability and business insurance.

3. Intellectual property: If you’re buying an existing clinic, make sure the purchase includes all the relevant intellectual property, the clinic name, logo and website.

4. Environmental regulations: Be aware of the regulations around waste disposal, especially medical waste.

5. Employment laws: Know your obligations as an employer, fair work practices, superannuation and workers’ compensation.

It’s highly recommended to get a lawyer experienced in veterinary practice transactions to help you navigate these legal aspects.

6. Clinic Assets and Infrastructure

When buying a veterinary clinic, you need to thoroughly evaluate the physical assets and infrastructure. This will help you understand the clinic’s current capacity and future needs. Here’s what to look for:

1. Location: Assess the location of the clinic in terms of accessibility, visibility and parking. Is it in a high traffic area? Is there room to expand if needed? Ensure there is ample parking for clients and staff, as this can significantly impact the convenience and accessibility of your clinic.

2. Building condition: Look at the overall condition of the building. Are there any major repairs or renovations needed? Is the layout suitable for a veterinary practice?

3. Treatment rooms: How many examination and treatment rooms are there? Are they well designed and equipped?

4. Surgery facilities: If the clinic does surgery, look at the condition of the surgical suite.

5. Diagnostic equipment: Take stock of all diagnostic equipment (e.g. x-ray machines, ultrasound devices, lab equipment). Are they up to date and well maintained?

6. Kennels and housing: If the clinic does boarding or hospitalisation, look at the quality and capacity of animal housing facilities.

7. Reception and waiting areas: Are these areas client and pet friendly?

8. Storage: Is there enough storage for medication, supplies and records?

9. Staff facilities: Are there staff areas, break rooms and lockers?

10. Safety features: Look for proper ventilation, fire safety equipment and security systems.

11. Compliance with regulations: Make sure all facilities comply with health, safety and accessibility regulations.

12. Technology infrastructure: Look at the clinic’s IT systems, practice management software, client communication tools and data storage solutions.

Remember, state of the art facilities are impressive but not always necessary. The key is to make sure the infrastructure supports good quality care and can adapt to future needs.

7. Getting a Highly Skilled Team and Culture

The staff of a veterinary clinic are its most valuable asset. When you buy a veterinary clinic you’re not just buying a building and equipment, you’re potentially inheriting a team.

Here’s what to look for:

1. Staff composition: What’s the current staffing structure. How many vets, vet nurses, receptionists and other staff members are there? Is this enough for the clinic’s needs?

2. Skills and qualifications: Look at the qualifications and experience of the team. Are there any specialists or staff with skills that add value to the practice? A highly skilled team can add significant value to the practice and enhance the quality of care provided.

3. Employment contracts: Review all employment contracts. What are the terms of employment, salaries, benefits and non-compete clauses.

4. Staff turnover: High staff turnover is a red flag. Try to find out why any recent staff have left.

5. Team dynamics: Observe how the team works together. A harmonious team is a big asset.

6. Work culture: Try to get a sense of the current work culture. Is it in line with your vision for the practice?

7. Training and development: Look at the current approach to staff training and development.

8. Key staff: Who are the key staff members that are critical to the clinic’s success? How do you retain them post purchase?

9. Leadership: If you’re not going to be heavily involved in day-to-day operations, look at the leadership within the existing team.

10. Client relationships: How do the current team interact with clients. Client relationships are key to a veterinary practice.

Remember, change can be unsettling for staff. If you do buy the clinic, have a plan for how you’ll manage the transition and communicate with the team.

8. Technology and Equipment

In today’s veterinary practice technology is key to good quality care and running a good business. When you’re looking to buy a veterinary clinic look at the technology and equipment:

1. Practice management software: What system is the clinic using? Is it up to date and user friendly? What are the costs and challenges of switching to a new system if needed.

2. Diagnostic equipment: What age, condition and capability of diagnostic equipment such as:

• • X-ray machines

  • Ultrasound devices

  • Blood analysers

  • Dental X-ray equipment

1. Surgical equipment: If the clinic does surgery, what’s the quality and condition of the surgical instruments and equipment.

2. Monitoring equipment: What monitoring devices are available for anaesthesia and critical care.

3. Pharmacy and inventory management: How does the clinic manage their pharmacy and inventory? Is there a system in place?

4. Client communication tools: What systems are used for client reminders, online booking and other client communications.

5. Digital records: Is the clinic using electronic medical records? If not, what’s the process and cost of digitising records.

6. Imaging storage: How are diagnostic images stored and shared? Is there a PACS (Picture Archiving and Communication System) in place?

7. Telemedicine capabilities: With the COVID-19 pandemic telemedicine has become more important. Does the clinic have the technology to offer telemedicine services?

8. Website and social media: Look at the clinic’s online presence. Is the website modern and functional? Are the social media channels active and effective?

9. Payment systems: Does the clinic have modern, efficient payment systems that can handle multiple payment methods.

10. Security systems: What are the clinic’s cybersecurity measures to protect client and patient data.

Remember, having the latest technology is not always necessary. The key is that the existing technology supports good quality care and there’s scope to upgrade or add to as needed.

9. Loyal Client Base and Community Reputation

The value of a veterinary clinic isn’t just in the physical assets or financials – a loyal client base and good community reputation are priceless. Here’s what to consider:

1. Client demographics: What’s the demographic of the current client base? Does it match the local population? Is there room for growth or diversification?

2. Client retention: What’s the client retention rate? A high retention rate usually means happy clients and good service.

3. New client acquisition: How do the clinic attract new clients? Are there marketing strategies in place?

4. Client records: Look at the quality and completeness of client records. Good records are essential for continuity of care and can give insight into the clinic’s operations.

5. Service mix: What services are clients using. Is there a good mix of wellness visits, medical treatments and specialist services? Evaluate the range of practice services offered to ensure they meet the needs of the local community.

6. Client feedback: Check online reviews and ask the current owner about any client satisfaction surveys or feedback mechanisms.

7. Community involvement: How involved is the clinic in the local community. Do they participate in local events or support animal welfare organisations?

8. Referral networks: What’s the clinic’s relationship with other veterinary specialists or emergency clinics in the area.

9. Brand recognition: How well known is the clinic in the local area? A strong brand is a big asset.

10. Social media presence: Look at the clinic’s social media accounts. An active online community is a valuable asset.

11. Growth potential: Based on the current client base and local demographics what’s the potential to grow the practice.

Remember when you buy a veterinary clinic you’re also buying its reputation. A clinic with a good, positive presence in the community is a solid foundation for future growth.

10. Growth Potential

While assessing the current state of a veterinary clinic is important, it’s equally important to consider the potential for future growth. Here’s what to consider:

1. Market trends: Research what’s trending in veterinary care – increasing demand for specialist services or preventative care. Can the clinic tap into these trends?

2. Local development: What’s the local development plan. Is the area growing? Are there new residential developments that will bring more pet owners to the area?

3. Service expansion: What services can you add. Could you add new specialities, diagnostic capabilities or treatment options? If the clinic is mainly small animal, consider the potential for growth in this area and the demand for such services.

4. Facilities: Can the current facilities be expanded. Is there room to add more consultation rooms, expand surgery or introduce new services?

5. Technology adoption: How can new technology improve efficiency or enable new services.

6. Staff development: What skills can the staff be developed to offer more advanced or specialist services.

7. Marketing opportunities: What marketing opportunities are untapped to grow the client base.

8. Partnerships: What partnerships can you form with other local businesses or organisations to drive growth.

9. Competition: What’s the local competition and where can you differentiate the clinic to gain more market share.

10. Client demographics: How will changing demographics in the area impact future demand for veterinary services.

By considering these factors you’ll get a better understanding of the growth potential and make a more informed decision.

11. The vet practice buying process

Once you’ve done your due diligence and decided to buy a veterinary clinic you’ll need to go through the buying process. Here’s a step by step guide:

1. Engage professionals: Assemble a team of professionals to help you:

• • A lawyer who specialises in veterinary practice transactions

  • An accountant who knows the veterinary industry

  • A business finance broker (if not buying directly from the seller)

1. Valuation: Get a professional valuation done on the practice. This will ensure you pay a fair price.

2. Letter of Intent (LOI): Once you’ve agreed on a price submit a Letter of Intent. This non-binding document outlines the proposed terms of the sale.

3. Do your due diligence:

• • Financial review

  • Review of all contracts and agreements

  • Review of client records and statistics

  • Inspection of all equipment and facilities

  • Review of staff contracts and performance

1. Finance: Get your finance in place. This may be:

• • Business bank loan

  • Seller finance

  • Investors

  • Personal funds

1. Purchase agreement: Work with your lawyer to draft and negotiate the purchase agreement. This will cover everything:

• • Purchase price and payment terms

  • Assets included in the sale

  • Contingencies or conditions

  • Non-compete agreements

  • Transition period

1. Licences and registrations: Get all necessary licences and registrations transferred or obtained.

2. Lease transfer: If the clinic doesn’t own the premises negotiate the transfer of the lease with the landlord. Consider negotiating a long lease to secure the premises for an extended period.

3. Insurance: Get all necessary insurances in place from day one.

4. Transition planning: Plan the ownership transition – how and when to tell staff and clients.

5. Closing: On the agreed date sign all documents and transfer funds.

Buying a veterinary clinic is a long process that can take several months. Be patient and do your due diligence.

12. Post Purchase

Once you’ve bought a veterinary clinic your journey as a clinic owner has just begun. Here are some things to consider in the post purchase period:

1. Staff communication: Meet with all staff to introduce yourself, your vision and address any concerns they may have.

2. Client communication: Tell clients about the change of ownership. Reassure them of continuity of care and any changes you plan to make.

3. Operational review: In the first few months keep a close eye on the clinic’s operations. Look for areas of improvement in efficiency, patient care and client service.

4. Financial management: Set up systems to monitor the clinic’s financials closely. This is critical in the first few months to ensure the business is meeting your projections.

5. Marketing: Review and update the marketing strategy. How to attract new clients and retain existing ones.

6. Technology upgrades: If you found any technology gaps in your due diligence start planning for the upgrades.

7. Staff development: Review your team’s skills and identify areas for training or development.

8. Service expansion: If you’re introducing new services start building the foundations for these.

9. Community engagement: Look for opportunities to engage with the community and leverage the clinic’s reputation.

10. Work-life balance: Running a veterinary clinic can be tough. Set up systems and delegate to maintain a work-life balance.

11. Continuous improvement: Get feedback from staff and clients regularly. Use this to improve your services and operations.

12. Long term business planning: Start thinking about the clinic’s long term goals. This may be expansion, adding specialities or opening new locations.

Remember the first year after buying a veterinary clinic is the toughest. Be patient, stay focused and don’t be afraid to ask for help from mentors or professionals when needed.

Ready?

Buying a veterinary clinic can be a great career and financial opportunity. It’s a big decision that requires thought and planning.

This has covered the main points to consider from initial research to post purchase management. Remember to:

• Do your due diligence on any clinic you look at

• Get a team of professionals to guide you through the process

• Review the clinic’s financials, assets, team and reputation

• Think about growth and your plans for the future

• Prepare for the transition period and early ownership

While this has been a comprehensive guide every veterinary practice purchase is different. Be prepared to adjust your approach to the clinic you’re looking at and your own circumstances and resources.

And don’t forget why you started. Whether you’re a vet looking to own your practice or an investor passionate about animal health, remember your goals. Your passion and vision will be the key to your success.

With planning, research and a clear direction buying a veterinary clinic can be the start of a great new chapter in your career. Good luck!

Need help with a business loan or business plan for your vet acquisition? Talk to our friendly, expert team.