Selling a veterinary practice is a significant milestone. Many practice owners focus on negotiating the purchase price, only to discover that the buyer’s due diligence can make or break the deal.
Understanding what’s involved allows owners to prepare proactively and protect their negotiating position.
What buyers are looking for
Buyers aren’t just validating your revenue—they’re evaluating how predictable and sustainable your business is. Buyer due diligence typically breaks down to four components:
- Financial due diligence. Buyers will typically request three years of tax returns and financial statements, as well as accounting records that reconcile revenues, expenses and adjustments. They also examine accounts receivable aging, collections issues, and they normalize EBITDA by removing one‑time or owner‑specific expenses to gauge recurring profitability. Not having all your documentation ready can obviously be a major roadblock to a deal.
- Operational due diligence. A purchaser will study patient records and production reports to ensure revenue is diversified and properly coded. Common requests include patient records, fee schedules, and staff details. Practices with up‑to‑date equipment and efficient workflows are more attractive because they signal lower post‑acquisition investment.
- Legal and compliance due diligence. Buyers will verify the clinic’s corporate status, review shareholder agreements, and inspect current licenses. All contracts at this stage are important—including associate agreements and service contracts. Ensuring that your lease is transferable and that there are no outstanding legal issues reduces transaction friction. Compliance with labor laws, OSHA/DEA requirements, and controlled‑substance regulations is also reviewed.
- Cultural and transition due diligence. Although harder to quantify, buyers may try to gauge the clinic’s culture and the likelihood that staff and clients will stay after the sale. High associate turnover or reliance on a single owner‑DVM can signal risk. Conversely, a stable, empowered team suggests continuity.
Preparing for a smooth due‑diligence process
As an owner, preparation is your best defense. Here are practical steps you can take today:
- Organize financial records. Maintain clean, accrual‑based accounting. Segment personal expenses or one‑time costs so they can be easily removed from EBITDA. Being able to provide normalized financial statements builds credibility.
- Document operational data. Make sure your practice management software can generate production reports by doctor, service line, and time period. Keep up‑to‑date fee schedules and document staff compensation and benefits. An orderly data room speeds the buyer’s review and reduces unnecessary guessing.
- Review contracts and leases. Work with a veterinary practice advisor and attorney to review your lease for assignability and check that employment agreements, equipment leases, and vendor contracts line up with your sale timeline. Resolving potential issues early prevents delays later.
- Plan your involvement. Decide whether you’re willing to stay on for a transition period (and under what terms). Buyers often value a smooth hand‑over, so your clarity will position you better in negotiations.
What’s next?
The due diligence process can be daunting, but it doesn’t have to be scary. Buyers simply want to validate their investment and ensure there are no hidden surprises. By staying informed, organizing your data, and addressing potential issues early, you can build confidence with a buyer and optimize deal value.
When you consider the path forward for your practice, how are you staying informed and top of your operations? At myVETgroup, we believe the best‑run practices are built with intention—and we’re here to help you navigate what’s next. Let’s explore this together.
