Valuing a veterinary practice

Usually by capitalising future maintainable earnings, assessed after a market salary for the principal veterinarian and market rent for the premises, at a multiple reflecting the risks specific to that practice. The result is then checked against net assets and any comparable sales. The largest normalisation adjustments are typically the principal's remuneration, related-party rent and deferred equipment replacement, and the largest risks are veterinarian dependence and recruitment. Where an equity interest is being valued rather than the business, enterprise value is adjusted for debt, surplus assets and working capital.

Usually, yes. A principal who fills most of the consulting and surgery diary is being rewarded for two separate things: the clinical hours worked, and the capital and risk carried as owner. A buyer inherits only the second, because the first has to be re-employed at whatever the market now pays a veterinarian. The deduction is built from rosters and revenue by practitioner: salary, superannuation and on-costs for the consulting, surgery and after-hours the principal personally performs, with a market rate for management time on top. If little survives that deduction, the hospital is worth its equipment, fit-out and stock rather than a multiple of earnings.

Not as a simple fraction of the whole, and two steps come before any percentage is applied. The hospital is first valued after a market salary for every veterinarian who consults or operates in it, the incoming associate included, so the associate is not asked to buy goodwill that their own future clinical work will create. The parcel is then examined on its own terms: does it carry any control over drawings, hiring and the timing of a sale, what does the shareholders or partnership agreement say about departure and the basis of valuation that applies on it, and would the clients the associate has built follow them if the arrangement ended. A twenty per cent parcel in a hospital the principal controls is a different asset from twenty per cent of that hospital.

It is worth the maintainable earnings the practice can sustain once every veterinarian, including you, is paid at market rates for their clinical work, capitalised at a rate reflecting the risk of those earnings continuing under a new owner. That figure is usually assessed after depreciation, or with a separate sustaining capital allowance, because equipment must be replaced on a cycle the accounts do not track.

The same earnings analysis applies, but two questions have to be settled before a number means anything. The first is what is being acquired: a share in the operating entity, an interest in the practice assets, or both, and whether the premises sit inside or outside that. The second is whether the interest carries control.

The streams are worth different amounts for each dollar of revenue, so they are analysed separately rather than blended. Consulting, surgery and diagnostics carry the margin and most of the goodwill, and they depend on veterinarians who are difficult to replace. Boarding, grooming and retail are lower margin, more labour intensive, easier for a competitor to replicate, and in the case of retail exposed directly to online pricing. They also behave differently through the year: boarding is seasonal and capacity constrained, and it frequently sits on land the owner also owns, which turns part of the question into a property question rather than a business one. A valuation should split the streams, allocate shared staff, premises and overhead honestly between them, and identify which parts a buyer is actually paying for. Corporate acquirers in particular are usually buying the clinical business and treating the rest as incidental, which is worth knowing before you price the whole on a single basis.

It depends on the state and on whether the premises must be licensed or registered. In New South Wales a veterinary hospital licence must be held by a registered veterinary practitioner, or by a corporation in which one or more practitioners hold a controlling interest, with a registered practitioner as superintendent. Queensland approves premises rather than owners, but its Board may refuse where no veterinary surgeon will be practising there. South Australia, from 1 July 2026, registers premises and requires an entity that owns or occupies them to nominate a South Australian registered veterinarian, resident in the State, as the responsible person. Western Australia registers premises in the applicant's name and requires a veterinary supervisor. Victoria has neither premises licensing nor an ownership restriction. Confirm the position for your state with your lawyer.

The practice and the property are valued separately. The practice's earnings are restated at a market rent on arm's-length lease terms, so that its value reflects the business rather than a property return, and the property itself would be valued by a real property valuer if a figure is needed. If you intend to sell the practice and keep the building, the lease you offer the buyer, including its term, rent, review mechanism and options, becomes part of the practice's value and part of its risk.

A licence is required for the hospital, and it constrains who may hold it. The Australian Business Licence and Information Service states that a New South Wales veterinary hospital licence is needed to perform major surgery on animals at any location, or to advertise any premises as an animal or veterinary hospital, and that an applicant must be a registered veterinary practitioner or a corporation in which one or more veterinary practitioners have a controlling interest. A registered veterinary practitioner must be nominated as superintendent. Requirements differ between states and territories, so the applicable ones should be confirmed for the practice being valued.

That depends on the state and on how the sale is structured. New South Wales requires a veterinary hospital licence, Queensland approves the premises themselves, Victoria has no premises licence, and South Australia and Western Australia register the premises with the registration in the applicant's name, so a buyer applies rather than inheriting yours. Radiation and scheduled medicines authorities sit under separate state regimes again.

It raises both the cost of the earnings and the risk attached to them. Jobs and Skills Australia reported in December 2024 that veterinarians have consistently appeared in national shortage and that the average time to fill a vacancy had risen from eight weeks in 2014 to 25 weeks in 2023 on industry data, while the AVA's 2023/24 survey found 36.8 per cent of vacancies took 12 months or longer to fill. A valuation prices the market salary needed to hold or replace each veterinarian, tests earnings if one leaves, and rates a settled multi-veterinarian roster as lower risk than a single principal.

The method is the same but the inputs differ. The AVA's 2023/24 survey reports a median of 22 on-call hours a week in mixed practice and 25.5 in equine practice, against none in small animal practice, and median weeks of 49 hours in equine practice against 38 in small animal. They also carry more travel, seasonal and breeding-cycle demand, and client concentration among a smaller number of producers or studs. Those factors affect maintainable earnings, recruitment and the risk rating, so a rural mixed practice and a suburban small animal practice are treated as different businesses.

Separately from goodwill. Drugs, vaccines, prescription diets, retail food, flea and worming products and consumables are ordinarily counted at or near settlement and paid for in addition to the price of the business, at an agreed basis such as cost. The valuer looks past the total to composition and turnover: short-dated vaccines, slow-moving retail lines and discontinued diets are not worth their invoice cost. How stocktake and payment are documented is a matter for the contract and the parties' lawyers.

It affects both the earnings and the risk attached to them. On the 2025 Occupation Shortage List published by Jobs and Skills Australia, both Veterinarian and Veterinary Nurse are rated as in shortage nationally and in every state and territory. Jobs and Skills Australia reported in December 2024 that the average time to fill a veterinarian vacancy had risen from eight weeks in 2014 to 25 weeks in 2023. A vacancy therefore caps capacity for a long period, wage assumptions must be set at what the practice would actually have to pay, and a stable rostered team becomes part of what the buyer is acquiring.

Not automatically. The Veterinary Practitioners Registration Board of Victoria's guidelines state that neither the Board nor statutory obligations require a veterinary practitioner to provide veterinary services outside normal business hours, although the public generally expects that emergency services can be obtained. After-hours is therefore a commercial decision. Where it is delivered, the valuer tests whether it is priced to cover the roster, what it costs in staff retention, and whether the principal absorbs it personally. Where after-hours is referred to an emergency centre, the earnings base is smaller but the key-person strain is lower.

Indirectly, through the reliability of the fee base rather than the fees themselves. Animal Medicines Australia's Pets in Australia 2025 survey found that 76 per cent of dog owners and 86 per cent of cat owners have no pet insurance, and that around one in six had deferred check-ups or vaccinations or cut medication. Where clients pay out of pocket, a fee schedule is tested rather than assumed to hold.