Guide

What actually determines what my veterinary hospital is worth?

A veterinary hospital's value is its adjusted earnings multiplied by a market factor. The adjusted earnings come from EBITDA with legitimate add-backs applied and owner compensation recast to replacement cost. The multiple depends most on doctor count, then on the type of buyer, the practice's growth trend, and its location.

Earnings, not revenue

The single most common misconception is that a practice is valued on what it bills. It is valued on what it earns, adjusted, and then a factor is applied to that.

Which means two practices with identical revenue can be worth materially different amounts — because one of them has a cost structure, a doctor mix and a set of add-backs that produce more defendable earnings than the other.

Doctor count moves the number more than owners expect

Most owners assume value tracks revenue. It tracks doctors. A single-doctor practice and a multi-doctor practice do not merely sell for different amounts — they sell to different buyers, on different logic, because a practice dependent on one departing veterinarian is a different risk from one that keeps running without any single person.

That has a consequence worth sitting with. One resignation can move a practice from one category toward the other, quietly, over a couple of years, while nobody is measuring it. Owners frequently carry a number in their head from three years ago and discover it has moved at the exact moment they have the least leverage to do anything about it.

The trailing twelve months matter more than last year

Buyers underwrite the trailing twelve months, not the last completed tax year. A practice that is growing quickly can be worth meaningfully more after another quarter, because three strong recent months replace three weaker older ones in the trailing figure.

We have advised owners to wait ninety days for exactly that reason, and the wait has been worth considerably more than the delay cost.

What a valuation is, and is not

A defendable valuation is one that can be supported line by line to a buyer's diligence team. That is the standard we underwrite to, because the purpose is not to flatter you — it is to hold up under scrutiny and give us the ground to push back when an offer comes in below it.

It is still a range until a buyer signs. Anyone offering a single precise figure for a practice they have not examined is selling you something.

The build-up, in one picture

How adjusted earnings are built: reported earnings, plus legitimate add-backs, with owner compensation recast to replacement cost, producing a defendable EBITDA.
Reported earningsWhat the tax return shows
Add-backsPersonal expenses, one-time costs, family payroll, owner-only travel
Owner compensation recastReplaced with what it would cost to hire a doctor to produce what you produce
Defendable EBITDAThe number a buyer's diligence team can verify line by line

A multiple is then applied to that figure. What it is depends mostly on how many doctors produce the revenue — see the bands below.

And what it gets multiplied by

Typical multiples of adjusted earnings, by doctor count: roughly six to nine times for a single-doctor practice, and nine to twelve times or more where two or more doctors produce the revenue. These are ranges we see in practice, not a quote — a two-doctor practice whose revenue depends on one producer has priced near eight times.
One doctor6–9×
A single producer
Two or more9–12×+
Revenue spread across doctors — the mark at 8× is a real two-doctor practice, priced below the band because one doctor produced most of the revenue.

These are the ranges we see, not a quote. Every deal is different — a practice where one doctor produces most of the revenue can price below its band, because the buyer has to plan for replacing that person.

More guides

What add-backs can I claim when I sell my veterinary practice? →Who is actually going to own my practice if I sell? →What am I actually promising the buyer when I sign? →

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