Vet Practice Growing by $300K Annually
3 DVM practice with PT DVM owner!
Growing by $300K in sales year over year, this 3 DVM practice in Portland is seeing huge growth trends! As of 2019, revenue was $1.9M, and total adjusted cash flow was $256K. We currently have the business priced at a 4.6 multiple on the 2019 cash flow. Consolidating two local offices will help streamline services and consolidate veterinarians, offering better service in a new facility. Most clients are house pets including dogs, cats, and some exotics who receive services that include general care, surgery, and radiology. The on-site pharmacy allows for easy dispensing of necessary medications and foods for special diets. Three veterinarians are currently on staff (2 PT, 1 FT) as are six vet assistants, three clinic assistants, one kennel assistant, and three receptionists. The owner, who practices full-time, is willing to remain a part of the team for up to one year, or as negotiated.
The new space will be 4,200 square feet and will feature four exam rooms, a surgical suite, a radiology room, a lab and pharmacy, as well as a reception area and storage. Three to four full-time veterinarians could be supported in the next location, increasing revenues.
Once fully staffed, current hours could be expanded to accommodate more clients as well as later, earlier, or more weekend appointment availability. Social media advertising may help get the word out about the new clinic and continuing to engage on these platforms may help to generate a wider client base.
- Year Established: 2005
- Location: North of Portland, Oregon
- Service Area: 15 mile radius of the clinic
- Services: General veterinary care, surgery, radiology, and diagnostics for dogs, cats, and exotic pets
- Clients: Wide demographic of pet owners
- Building: 4,200 sq. ft.: 4 exam rooms, surgical suite, radiology, lab, reception, pharmacy, storage (The building will be for sale outside the sale of the business.)
- Reason for Selling: Retirement
- Employees: 16: 3 Veterinarians (2 FT, 1 PT), 3 receptionists, 6 vet assistants, 3 clinic assistants, 1 kennel assistant
- Seller Training Period: 1-2 years as a DVM, or as an equity holder
- Growth Opportunities: Add vets to the staff, engage on social media, implement a review campaign, target advertising to promote new clinic
- Current Owners’ Responsibilities: Part-time DVM
- List Price: $1,215,000
- Gross Sales:
- 2019: $1,910,703
- 2018: $1,666,479
- 2017: $1,372,552
- Cash Flow:
- 2020: $319,480
- 2019: $256,169
- 2018: $192,247
- 2017: $132,225
- Assets Included in Purchase
- Equipment: $89,000: X-ray machine, lab equipment, exam equipment
- Inventory: $71,000: Supplies, medicine, food
- Intangible Assets: Long-term clients, caring support staff, few competitors in the immediate area
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
|P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$160,934||$353,746||$273,293||$197,432||$169,259|
|Compensation to Owner||$24,000||$72,000||$72,000||$72,000||$72,000|
|11% Tax on total W2 Salaries||$2,640||$7,920||$7,920||$7,920||$7,920|
|Legal Expense||$2,333||$4,000||$4,000||$4,000||$4,000||Personal expense|
|Auto Expense||$31||$20||$1,463||$708||$1,379||Personal expense|
|Contract Labor||$0||$0||$1,395||$0||$0||Paid for another business|
|Rent Adjustment||$-25,003||$-62,132||$-61,708||$-61,486||$-47,093||New building is $10,409/month|
|Auto & Life Insurance||$1,295||$3,109||$3,109||$3,109||$3,109||Personal expense|
|Cell Phone||$1,458||$3,501||$3,501||$3,501||$3,501||Personal expense|
|Comcast||$1,250||$3,000||$3,000||$3,000||$3,000||Paid for another business|
|Replacement||$-58,333||$-140,206||$-153,316||$-126,275||$-122,012||Based on 23% of production|
|Seller's Cash Flow = Total Addbacks + Net Income||$133,117||$256,169||$192,247||$132,225||$117,139|
|Profit Margin||16.29 %||13.41 %||11.53 %||9.63 %||8.83 %|
- The new clinic space will allow for a condensing of expenses and will allow for additional veterinarians to join the team.
Veterinary care for:
- Exotic pets
- General veterinary care
- 3 Veterinarians (2 FT, 1 PT)
- 3 Receptionists
- 6 Vet assistants
- 3 Clinic assistants
- 1 Kennel assistant
- Add vets to the staff
- Engage on social media
- Implement a review campaign
- Target advertising to promote new clinic
The Firm used a cash flow valuation methodology to determine the purchase price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2019 cash flow was used with a prescribed multiple is 4.6. With this information, the computation is as follows:
$256,169 x 4.75 = $1,216,803
The fair market value found above positions the business list price at $1,215,000.
Purchase Price: $1,215,000
10%Buyer Down Payment: $121,500
10%Seller Financing/Equity: $121,500
80%Bank Loan: $972,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,265.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $12,773.
After business expenses and loan payments, a buyer with a 10% down payment of $121,500 would retain a profit of $75,706, which results in a 62% return on investment in the first year.
A lender is required to have a minimum 1.3 coverage ratio for any business loans extended. At a proposed purchase price of $1,215,000 with the terms listed above, the coverage ratio is 1.42.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2019 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2019 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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