If you own a veterinary practice in Indianapolis, you should know that the current market presents a significant opportunity. Valuations are strong, and buyers, from large corporate groups to individual associates, are actively looking for healthy practices. However, a successful sale depends on more than just a strong market. Proper preparation is what separates an average outcome from a great one. This guide walks you through the key dynamics of the Indianapolis market, from valuation to the sale process, to help you make an informed decision.
Curious about what your practice might be worth in today’s market?
Market Overview
The Indianapolis veterinary market is dynamic. It is characterized by steady client demand and a mix of well-established neighborhood practices and emerging specialty clinics. This creates a healthy environment for owners who are considering a sale.
A Healthy Market Environment
Small animal practices in the area typically see stable profit margins, often between 10% and 15%. However, your specific location within the Indianapolis metro area plays a big role. Practices in affluent or rapidly growing suburbs often attract more attention and higher valuations than those in saturated or stagnant areas. Buyers are looking for consistent profitability and clear potential for future growth.
The Buyer Landscape
You have options when it comes to who will buy your practice. A private sale to an associate is a common path that offers continuity. Recently, however, corporate buyers have become very active in the Indianapolis market, especially for multi-doctor practices. These groups often have the capital to pay premium prices but may have different goals for the practice’s future. Deciding on the right type of buyer for you is a critical first step.
Key Considerations for Indianapolis Sellers
Beyond the market, a buyer’s focus will be squarely on the health of your individual practice. They will look past the surface-level numbers to understand the core drivers of your success. This includes your operational efficiency, like keeping your Cost of Goods Sold (COGS) in the ideal 23% to 27% range. They will also scrutinize the loyalty of your client base and the stability of your team. One of the most important, yet hardest to define, assets is your practice9s goodwill. This is the value of your reputation in the community. Planning how to transition both your staff and your practice’s goodwill to a new owner is a conversation you should start having long before you are ready to sell.
Your legacy and staff deserve protection during the transition to new ownership.
Market Activity and Valuations
The current market is very favorable for sellers. We have seen a significant increase in practice valuations over the last few years. Today, buyers typically value practices using a multiple of their Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). While some practices may be valued based on a percentage of gross revenue, a multiple of earnings is the standard for most sophisticated buyers. These multiples can vary widely based on your practice’s size, profitability, and growth profile.
| Practice Characteristic | Typical EBITDA Multiple Range |
|---|---|
| Smaller, Solo-Practitioner | 3.0x 6 5.0x |
| Multi-DVM, Profitable | 5.5x 6 7.5x |
| Large, Specialty, or Platform | 8.0x 6 13.0x+ |
As you can see, a larger, professionally managed practice with multiple doctors commands a higher multiple. This is because it presents less risk to a buyer. Understanding where your practice fits is the first step toward a successful transaction.
The Sale Process
Selling your practice is a structured journey, not a single event. The path begins with a professional valuation to understand your practice’s true market worth. From there, we work with you to prepare marketing materials that tell your practice’s story while protecting your confidentiality. We then identify and approach a curated list of qualified buyers. This leads to negotiation, where we work to secure the best possible terms. The final stage is due diligence, where the buyer verifies all financial and operational details of the practice. Each step has its own challenges. Having an experienced guide to manage the process can prevent missteps and keep the deal on track to a successful closing.
The due diligence process is where many practice sales encounter unexpected challenges.
How Your Practice is Valued
I often find that practice owners are surprised by what their business is truly worth. This is because they are used to looking at their net income. A buyer, however, looks at your Adjusted EBITDA.
Beyond Net Income: Adjusted EBITDA
Adjusted EBITDA starts with your net income but adds back interest, taxes, depreciation, and amortization. More importantly, it adds back owner-specific and one-time expenses that a new owner would not incur. Think of things like your personal vehicle lease, family members on payroll who are not active in the business, or an above-market owner salary. For example, a practice with $500,000 in net income might have an Adjusted EBITDA of $700,000 or more after these items are properly accounted for. This normalization process is the foundation of a strong valuation.
Telling Your Growth Story
Buyers are not just buying your past performance. They are buying your future potential. A compelling valuation frames your numbers within a story of growth. This could be the potential to add a new associate, expand services, or capitalize on the growing demographics in your Indianapolis neighborhood. We help you build this narrative to show buyers not just what your practice is, but what it can become.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Post-Sale Considerations
The day you close the sale is a beginning, not an end. Your transition plan should account for what comes next. The structure of your sale has major tax implications. Careful planning is needed to maximize your after-tax proceeds. You also need to decide on your future role. Will you retire completely, or will you stay on for a transition period? Some owners choose to roll over a portion of their equity into the new, larger company, giving them a chance for a “second bite at the apple” when that company sells in the future. Finally, be prepared for ongoing responsibilities like ensuring animal health records are maintained for the required three years. A well-designed exit strategy considers all these factors to protect your financial future and your legacy.
Every practice sale has unique considerations that require personalized guidance.
Frequently Asked Questions
What is the current market like for selling a veterinary practice in Indianapolis?
The Indianapolis veterinary market is dynamic with strong valuations. There is steady client demand and a mix of neighborhood practices and specialty clinics, creating a healthy environment for sellers. Practices in affluent or growing suburbs tend to attract higher valuations.
Who are the typical buyers for veterinary practices in Indianapolis?
Buyers typically include individual associates seeking private sales for continuity and corporate groups, especially for multi-doctor practices. Corporate buyers often have the capital to pay premium prices but may have different goals for the practice’s future.
How are veterinary practices in Indianapolis valued?
Practices are typically valued using a multiple of their Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Multiples range from about 3.0x-6.5x for solo practitioners to 8.0x-13.0x+ for large specialty or platform practices. Adjusted EBITDA accounts for owner-specific and one-time expenses.
What are key considerations for preparing my practice for sale?
Buyers look at operational efficiency, such as keeping Cost of Goods Sold (COGS) in the ideal 23%-27% range, client loyalty, staff stability, and the practice’s goodwill or reputation in the community. Planning how to transition staff and goodwill to a new owner early is important.
What happens after the sale of my veterinary practice?
Post-sale considerations include planning your future role, tax implications of the sale, potential equity rollover into the new company, and ensuring compliance with ongoing responsibilities such as maintaining animal health records for three years. A well-designed exit strategy protects your financial future and legacy.