Building a Veterinary Practice Buyers Want: Growth, Structure, and Valuation Readiness

Don Adeesha:

You built the practice. You served the clients. You cared for the patients. You hired the team.

You carried all the decisions, the pressures, the growth, the problems, all of it. And then one day, you start wondering what the business is actually worth.

Most veterinary practice owners spend decades building a business, only to realize at the finish line that they’ve built a high-paying job, not a transferable asset.

If your clinic can’t survive a week without you at the helm, you aren’t just exhausted; you are likely leaving millions of dollars in valuation on the table.

Welcome back to the Vetpreneur Business Podcast. I’m your host, Don Adeesha, and it’s great to have you here.

To help us bridge the gap between running a clinic and owning a scalable business, we are joined by Muriel Touati. Muriel is the Founder and CEO of Exit 3D Studio. She’s a renowned authority on exit readiness, specializing in helping service-based founders move away from the daily grind to create structured, visible, and highly profitable businesses that buyers crave.

Today, we are discussing what truly drives practice valuation beyond revenue. We are talking about the owner dependency trap and how to optimize your digital and operational systems to maximize your eventual exit.

And of course, this episode is brought to you by Ekwa Marketing, the team helping veterinary practice owners elevate their online presence and grow with clarity.

With that being said, Muriel, it’s great to have you on the podcast.

Muriel Touati:

Thank you, Don. I’m really happy to be here today.

Don Adeesha:

Muriel, from a buyer’s perspective, what makes a veterinary practice more valuable than just its revenue or profitability?

Muriel Touati:

That’s a good question.

I would say it is the predictability and the fact that, if the owner were to leave, the new owner could run the business just as it was before.

That means a veterinary practice is transferable. Everything has been documented. Not everything is dependent on the owner.

That is what is most valuable. That is what a buyer will value and pay more for: a business that can really transfer.

Don Adeesha:

Absolutely. Now, you’ve spoken about the hub-and-spoke example. Can you explain that?

Muriel Touati:

Yes, sure.

When I think about my framework, which applies to all types of service businesses, there are some questions a buyer will ask and price into the deal.

For example, is the revenue concentrated?

In a veterinary practice, that could mean asking: does the revenue come from one referral source that the owner owns or controls?

For example, you might have another veterinary practice that sends you clients. That is one channel and one source. It is not guaranteed that it will transfer to a new owner.

So this is an important question to ask at the beginning: is the revenue concentrated from one channel, or does it come from loyal clients who come all the time?

Because the question is: if one or two relationships walk out the door, does the revenue drop significantly or not?

Usually, buyers will flag customers that represent 10% to 15% or more of revenue. Imagine this: if tomorrow you sell your veterinary practice and that relationship doesn’t transfer to the new owner, that could directly mean 10%, 20%, or even 40% of the revenue disappears.

When the revenue is concentrated, it is always a risk for a buyer, and this is something they will discount automatically.

Usually, that can happen through an earn-out or a seller note. Let’s say the owner asks for $2 million for their practice, but the revenue is concentrated at 40%. The buyer might say, “Okay, I offer $2 million,” but the terms may include some seller notes, maybe even forgivable seller notes.

For example, if the revenue stays at $1 million for one year, then you get your seller note because we were able to retain the clients. But if the revenue drops 20% or even the full 40%, then that seller note could be forgiven, which means it is never paid.

So, the transferability of the relationship and avoiding customer or revenue concentration is very important when you are thinking about selling a business.

Don Adeesha:

What are the most common valuation mistakes veterinary practice owners make before they sell, or even before they decide to sell or transition?

Muriel Touati:

There are several, but one mistake is pricing future upside into the asking price.

For example, let’s say the practice has $500,000 in EBITDA and the owner wants a six multiple, so they want $3 million. But they include future possibilities in that asking price.

They might say, “Next year they are going to build a mall next to my practice. There will be more traffic. In two years, someone could open another location there. They could also do this, this, or that online.”

But those are upside opportunities for the buyer, not for the seller.

The seller should be implementing those things if they want to get the $3 million asking price. If the buyer has to do all of that, then the upside belongs to the buyer, and the asking price should be lower.

I think this is one of the reasons why so many businesses that go up for sale never actually sell. I believe there are some official statistics from the Exit Planning Institute that say around 70% to 80% of businesses that go up for sale, across industries, never sell.

I think this is one of the issues. Sellers ask for too much. There are other structural issues too, but this is a big one.

Don Adeesha:

So, just to recap that point, what they’re basing the valuation on is more of a forecast. It hasn’t happened yet. It’s their hope.

Muriel Touati:

Exactly. It’s their hope.

We base valuation on the past three years of revenue, plus the trailing twelve months. So basically, we need to look at three or four years in the past, depending on where we are in the year.

For buyers who intend to get a loan to buy the business, most of the time lenders will go even deeper than that. They won’t just look at three years. They may take into account the worst year of the last three years.

If the revenue can drop that much, that means it can drop again in the future.

Then different calculations are made, along with the buyer’s profile and information, to come to a DSCR number, which is the debt service coverage ratio.

If it is 0.5, forget it. They will never get the loan. It needs to be at least 1.25, and the higher, the better. That means the lender is confident that the buyer can repay the loan with the business as it operates and as it has operated in the past.

We don’t look at the future. We assume that things will continue in the same trend, unless there is a major catastrophe like COVID or something like that.

Now we also think about AI disruption and those kinds of things. Fortunately, I think for veterinary practices, we are good. There is not too much AI disruption there.

Don Adeesha:

Until the robots come and take over all the technical jobs, but that’s a conversation for another time.

One of the biggest mistakes you are seeing is not correctly understanding valuation from the seller’s point of view. They may expect the future to look brighter than the past.

But from the buyer’s perspective, they have to think about the loan. And from the lender’s perspective, they are asking, “Is it possible for me to recover this money if I lend it?” To do that, they need hard facts. Even in the worst year, can the buyer repay it if they have the correct DSCR?

Muriel Touati:

Yes, that’s it.

That’s why it’s important to prepare years before a sale, not six months before.

Six months before, you can make the financials look good by adding a lot of add-backs and adding a little fluff to increase EBITDA and valuation. That’s always good, but it’s not the same as preparing properly.

Don Adeesha:

What are those fluffy things that can make the business look better within six months?

Muriel Touati:

I think it’s the work they will do with their business broker, for example.

They might ask: have you taken any trips that you want to add back as personal trips? If they took a vacation with the family, this could come as an add-back. They might say, “I spent that money with my family. It was personal, but I put it as a business expense. You, the buyer, will not make that expense, so this is money I’m adding back.”

They are not really transferring that money back into the account, but they write it so it appears on the financials.

Other things could be restaurant bills. This is one way they prepare six months in advance.

But this is always dismantled by buyers and lenders, so sometimes it’s almost not necessary to do too much of that.

Some add-backs are legitimate and should be included. For example, if the veterinarian is getting an above-market salary, then the difference could be an add-back. That is legitimate.

The owner’s own insurance or things related to a personal car can also be add-backs.

Don Adeesha:

Those are very minor things to make it look a little bit better once the decision is going in a more positive direction.

But correct me if I’m wrong: having those add-backs, like the difference between the owner vet’s above-market pay or vacation time, would not be the deal breaker or deal maker.

Muriel Touati:

No, it’s not a deal breaker. I think it is part of the game.

They should be doing it, because why not? But they need to be open to the fact that not everything will be accepted.

A lot of things will be rejected. The buyer may say, “This is not acceptable. This is not acceptable.” It is part of normalizing the EBITDA that way.

Don Adeesha:

So it is more of a good-faith conversation on top of an already solid, transferable asset.

Muriel Touati:

Yes.

And something worth mentioning is that when a buyer makes an offer, after that they do very in-depth due diligence and check everything, including all those add-backs.

Everything has to be justified. Some add-backs are accepted, and it is legitimate to add them back. Some are not.

Don Adeesha:

So it is really more of a transparency conversation. When the buyer is doing due diligence, they expect all of these things to be clear. If they are not, that might be a deal-breaker signal, because they may wonder whether something is being hidden or whether the information is inconsistent.

Are those deal-breaker signals?

Muriel Touati:

Yes, there can be many deal-breaker signals.

Let’s say they really want to push an expense as a personal expense when it is not. Sometimes we see this with marketing or advertising. Let’s say they spent $20,000, but it did not work. That is still a business expense. You cannot add it back.

If there is a struggle there, it can be a deal breaker.

Another example is when we check how recurring the revenue really is.

At the end of last year, I had an offer accepted for an agency, and this is exactly what I bumped into. They were marketing the agency as having recurring revenue.

But when I did my research and looked at the revenue per client over the past year, month by month, I could see that last August they had 35 clients. In December, they still had 35 clients. Then in February, still around 30 to 35.

If they are actually bringing on 10 new clients per month, why is it always the same number?

When I analyzed it, I could see it was not recurring revenue. It was rollover revenue. Every month, they were getting 10 new clients, but every month they were also losing 10 clients.

So it was more of a rollover type of revenue than truly recurring revenue. Recurring revenue happens consistently. Three months is almost a project.

That is another example of a potential deal breaker.

Don Adeesha:

Absolutely. When you don’t have that recurring revenue, or when it almost seems like false marketing, that becomes a problem.

Muriel Touati:

Yes, and this happens a lot, unfortunately.

But when I say deal breaker, before it becomes a deal breaker, it is usually a renegotiation.

The buyer is going to try to negotiate and possibly decrease the offer. They may say, “This is not recurring revenue,” or “Nothing is documented,” or “Revenue is concentrated and you did not disclose that before. Now that I know, I need to tell you that your practice, to me, does not worth $2 million anymore. It is worth more like $1.2 million. I can make that offer, but I also want a forgivable seller note because of the concentration.”

If the seller agrees to the discount, then it is not a deal breaker. They can get to the purchase agreement and get the deal done.

But if there is a struggle and the seller does not want that, or if the buyer is no longer confident and feels like they were misled, then the deal may not happen.

For example, if a buyer was looking for a veterinary practice that is not founder dependent and realizes it is founder dependent, then instead of buying a business, they would be buying themselves a job. If that is a deal breaker for the buyer, then the deal will not happen.

Don Adeesha:

The reason I was excited about that dependency factor is because I wanted to ask a follow-up question.

We have seen the problem: owner dependency.

Break it down for us, Muriel. How does owner dependency affect the value of a veterinary clinic, especially when clients are strongly attached to the founder or lead doctor? And how can practice owners fix that?

Muriel Touati:

Owner dependency affects valuation because anything that is founder dependent, whether that is sales, operations, or decision-making, creates risk.

If we need the founder to run the business, and if we take the founder out for 90 days or even one week and the business collapses, that affects the valuation for sure.

Don Adeesha:

And how can we fix that? That is the most important part.

Muriel Touati:

We can fix that in several ways.

For example, if the founder is making all the decisions, maybe they can start delegating some of those decisions to other veterinarians in the practice.

They can say, “For this type of normal situation, assume it is always a yes,” or “For this type of situation, we always do this.”

It is about having systemized decision-making.

I am pretty sure that for many decisions, based on their training, the team knows what they need to do. But if there are still decisions that need to be taken systematically by the founder, then maybe the owner needs to see how they can delegate that.

Another way is to document everything that is done.

Everything documented in SOPs, or standard operating procedures, is very valuable because it means somebody can read the manual or instructions and know what to do exactly the way the founder would do it.

This is one of the ways to reduce founder dependency internally.

Don Adeesha:

When it comes to creating SOPs and documentation, it takes time, especially if the procedure has been refined to the point where the owner knows exactly what to do, but there are a lot of key processes and thoughts behind it.

To document that on paper is difficult. What would you say to a practice owner facing that dilemma? How can they begin?

Muriel Touati:

I would say that an SOP in any format is sufficient.

If the owner prefers to leave a voice note on their phone, they can do that. Once they have the voice note, they can send it to AI and AI can create the SOP for them.

They can also record a video. It does not have to be a long sitting session. It can be done on the go.

Even better, if they have an assistant who knows the different tasks, the assistant can document everything for the founder.

So it can be delegated, or they can just take their phone, use AI, talk through the process, and it can create a comprehensive SOP.

Don Adeesha:

That is a great way to start using AI.

I also appreciate the idea of getting help from an assistant in a different way to create those SOPs, because otherwise it feels like something the owner has to do by themselves. They may have a tough time finding the time to dedicate to the documentation process.

Amid all this valuation talk, I also have one last question regarding this dependency.

For a founder who is also the lead surgeon, what transition period does the buyer usually demand if the owner is the primary revenue driver?

Muriel Touati:

There are two things in that question.

If the owner is the lead surgeon, it is important either to bring someone in or accept that there may be a future discount.

If the lead surgeon is also the owner, there are two paths.

One path is to continue as it is and accept a lower multiple, maybe two or three, maybe even less.

If the owner wants a higher valuation, like a four, six, or even more multiple, then they need to replace themselves in the practice.

They can bring in another lead surgeon who is an employee in the practice. That person could become the future lead surgeon for the future buyer.

That is the operational side.

On the sales side, it depends on how sales are handled. If sales only come from referrals, and the founder is networking, going to events, giving out business cards, and people know them and want to work with them, that is not the best way.

The owner needs to find a way to have systemized lead generation and sales.

There are different ways. They could hire a salesperson or have a team that handles that. They could make better use of digital marketing and be present on the main platforms where clients can book appointments for their pets.

They should have direct booking on the website and bring traffic to those platforms and websites.

For a veterinary practice, I like Google Business Profile. You search, you appear, you are on Google Maps. That is the number one way, I think, along with good reviews.

Don Adeesha:

Of course, because if you have negative reviews, that can be a turnoff. But then again, it might also be a signal for you to change some things in your practice.

Muriel Touati:

Yes, it is feedback.

A review is feedback. It is also good to answer bad reviews because it shows that you care and intend to do better. Sometimes there is a misunderstanding or misinterpretation.

Also, having no reviews or only good reviews is not ideal either. Practices should request a review from every client because it builds credibility and improves the perception from the outside world.

It also gives buyers a better perception when they do their digital due diligence, which I did when I was looking to buy an agency, and I am still looking.

When I look at businesses, one of the first things I look at is digital presence. With what they have built, is it realistic to assume they are generating leads online? Is it systemized or not? Or is everything referral-based and dependent on the owner?

Don Adeesha:

I really appreciate this point, Muriel, because on the same topic of building a veterinary practice that buyers can trust, it is not just about revenue.

It is also about how structured, visible, and scalable the practice looks from the outside.

This is where marketing becomes very important. A strong digital presence, clear patient acquisition systems, a strong online reputation like Google Business Profile, and consistent communication all contribute to how your veterinary clinic is perceived, not just by pet owners, but also by auditors and potential buyers.

For our veterinary practice owners listening who want to understand where they currently stand, the Veterinary Business Institute, in partnership with Ekwa Marketing, offers a Marketing Strategy Meeting.

This is a focused marketing strategy session designed to review your clinic’s current digital presence, identify gaps, and uncover opportunities to strengthen growth and long-term practice value.

This session is led by Laila, a veteran in veterinary marketing who has conducted audits for over 200 veterinary clinics and helped them improve their online presence.

Her experience gives practice owners a practical, clinic-specific view of what is working, what may be holding growth back, and what can be improved across areas like website performance, online visibility, reviews, patient acquisition, and digital marketing systems.

Go ahead and take the next step. Veterinary practice owners can book a session with Laila at:

I’ll repeat that one more time:

Get a clearer, expert-backed roadmap for strengthening your clinic’s market position, digital presence, and future value.

That being said, let’s get back into our conversation.

Muriel, what are some simple steps veterinary practice owners can take in the next six to twelve months to make their clinic more attractive to buyers?

Muriel Touati:

I would start with documenting as much as they can.

See how to automate client meetings online. Reduce founder dependency on sales. Systemize that.

Know and track everything. Start to track the retention rate by client and how much revenue comes from each client.

All of those things are going to be asked by a buyer, and it is good for yourself to know your customer concentration.

If you realize you have some clients that represent 10% or more of your revenue, or if you are too dependent on one acquisition channel, look to diversify that. It will give more confidence to a buyer.

I go more in-depth into all of that in my future book, The Valuation Gap, which will be released on July 27th. It explains how to close the gap between the valuation the seller wants and the valuation the buyer will pay.

As a buyer, and as part of a buying community with many other buyers, I can say this directly: we do not mind paying a lot for a good business.

But the business needs to be solid and transferable.

If I am sure that the cash flow will be mine once we go to the finish line and transfer the business, then I do not mind paying more for that.

But if it is a business where I will have to document everything myself, become the previous founder, keep the relationships, retain the employees, and manage everything, I do not want to buy a business like that.

And if I do, it will be heavily discounted.

I often see those types of practices when looking at business-for-sale websites. I have noticed that medical practices, like dentist offices, can sometimes have lower multiples because maybe there are only one or two people there, and the practice is heavily founder dependent.

Don Adeesha:

That is unfortunate, especially because, as you mentioned, for a good practice with strong cash flow, the right price can be paid. That is what everyone wants when looking for an exit.

So if a practice is not getting the valuation it deserves, as a final takeaway from this conversation, what would you tell our listeners? Where can they start, and what is the main thing they should look at fixing to turn it around into a high-value practice?

Muriel Touati:

They should try to step out for a couple of days and see what breaks first. Then fix it.

That would be my takeaway.

If all the appointments with clients cannot be honored because the owner was supposed to be there, that means you need to bring someone in.

If the team is stuck with a decision and they do not know what to do, document everything.

If the owner is the one picking up the phone to book every appointment, and then there are no more appointments when the owner is away, solve that as soon as possible. Either get an assistant to pick up the phone and book appointments, or make appointment booking available online.

Just step out of the business for a couple of days and see what happens, so you can fix it.

Don Adeesha:

Amazing.

Well, that was a powerful look at building practice value and transferability with Muriel Touati.

If you have been struggling with the feeling that your clinic is entirely dependent on your personal presence, we hope this conversation gave you the frameworks to rethink your operational and marketing systems.

Mastering owner independence is not just a management goal. It is the ultimate driver of your practice’s final sale price and, of course, your own personal freedom.

If Muriel’s approach to exit readiness resonated with you, we highly recommend connecting with her and exploring her work at Exit 3D Studio, where she acts as a strategic architect for owners ready to scale and eventually transition on their own terms.

A quick reminder: if you want to better understand how your practice shows up online and where your marketing may be holding back your growth, you can book a complimentary Marketing Strategy Meeting with Laila through the Veterinary Business Institute in partnership with Ekwa Marketing.

You can book your session at:

That being said, I’m Don Adeesha, and this has been the Vetpreneur Business Podcast. We’ll see you on the next one.

Take care, everyone.