Growth has to read as a system — veterinary

Preparing for exit — making growth read as a repeatable system rather than as the owner

PRESENTATION — WHAT THE OPERATOR SEES

The owner is twelve to thirty-six months from a sale and wants the growth story to survive diligence. Revenue has grown every year. The concern, usually unspoken, is that a buyer will look at the same numbers and see price increases in a market with falling transaction counts, an owner who is also the top producer, and associates with nothing keeping them past close.

DIFFERENTIAL — LIKELY CAUSES, MOST LIKELY FIRST

01
Revenue growth is entirely ATC and the transaction trend is negative

A buyer underwrites volume, because price increases are available to them too and are not credited as management. Revenue growth built on ATC in a market with declining transactions gets modelled as flat or worse.

IDEXX reported US same-store clinical visits −1.9% for full-year 2025 and guides to roughly −2% again in 2026. iVET360 put 2025 transaction volume at −4.7% against ATC +7.5% and revenue +2.6%. BLS CPI 'Veterinarian services' rose 48.8% between December 2019 and December 2025, while BEA's real quantity index for pet veterinary services fell in 2025. Ackerman Group states invoice counts have declined at least 2% in each of 2022, 2023, 2024 and 2025 — fifteen consecutive quarters.

IDEXX Q4 FY2025 Prepared Remarks (same-store; the 2026 figure is guidance, not measured); iVET360 2026 Veterinary Industry Benchmark Report (N not disclosed); US BLS CPI series CUUR0000SS62054; BEA NIPA Table 2.4.3U. Chain-of-custody note: Ackerman does not name an upstream source for its invoice-count series, so it is corroborating context rather than an independent measurement.

NOT THIS IF — Transaction count has grown in each of the last three years. That is the rarest and most valuable thing a veterinary seller can put in front of a buyer right now, and the workup should shift to making it legible rather than to fixing it.
02
The practice is the owner

Production that walks out at close is not EBITDA. A buyer prices owner-dependent production at a discount or holds it back in structure, and both outcomes reduce cash at closing.

Practice owners spend 74% of their time seeing clients and patients and 22% managing the practice. Within private practice, 23.8% of veterinarians are practice owners and 57.4% are associates. The average practice runs 2.76 FTE veterinarians, so in a typical single-site hospital the owner is one of roughly three producers.

2024 AVMA Veterinary Practice Owner Survey via AVMA/JAVMA News Nov 18 2024; 2024 AVMA Census of Veterinarians via the AVMA 2025 SotP Report; 2025 AVMA Veterinary Practice Owners Survey

NOT THIS IF — Owner production is a small share of total DVM production and a medical director already runs the clinical floor. Then the dependence is administrative rather than clinical, and it is a shorter fix.
03
Associate retention is unresolved — and buyers now price it explicitly

In a market short of associate DVMs, the buyer is purchasing the doctors as much as the practice. Unretained associates come straight out of transaction value.

Per-associate DVM retention incentives in Ackerman's closed transactions grew 55% from 2024 to 2025, exceeding $140,000 per associate in one-to-three-associate practices, and rising from 3.3% to 4.1% of total transaction value. Nearly 50% of Ackerman's 2025 deals involved a joint venture, rising above 60% for sellers under 50. BLS reports veterinary technician employment fell from 131,320 to 129,140 between May 2024 and May 2025 while mean wages rose about 6%, and VMG's 2025 survey put veterinary assistant turnover above 31%.

Ackerman Group, 2025 Q2 and 2025 Q4 Veterinary Industry Market Updates (Ackerman's own closed deal book, which it states is about 14% of US corporate veterinary transactions; sell-side brokered and skewed toward larger practices); BLS OEWS May 2024 and May 2025; VMG 2025 Economic Survey

NOT THIS IF — Associates are on signed multi-year terms with production-linked economics that survive a change of control. Then retention is already priced in your favour.
04
The books have never been normalized, so diligence rebuilds them — downward

Every category a buyer has to reconstruct is a category they reconstruct conservatively. Unnormalized statements do not just slow diligence; they cost multiple.

The AAHA/VMG Chart of Accounts is the standard revenue and expense taxonomy for veterinary practices, distributed free by both AVMA and AAHA, and AVMA explicitly recommends it as the standard. The cost of not using it is visible in the sector's own published figures: revenue per practice is reported at approximately $1.5M, $1.841M, $2.2M and $2.7M for overlapping periods, and the differences are denominators, not measurement error. Real estate compounds it — 54.9% of owners hold the practice in one legal entity with land and buildings in a separate one, 24.7% own the practice but not the property, and 19.3% hold all of it in a single entity.

AAHA/VMG Chart of Accounts, distributed by AVMA and AAHA; 2025 AVMA Practice Owners Survey; US Census 2022 Economic Census, NAICS 541940 (derived: $62.819B across 34,126 establishments); Vetsource Industry Summary; Brakke/Volk via AVMA/JAVMA News Feb 13 2026; AVMA 2025 SotP Report p.39

NOT THIS IF — The last three years are already on the AAHA/VMG taxonomy with real-estate and owner-compensation add-backs documented. Then the reporting is not the risk.
05
The window has changed and the plan was built for the old one

Sellers plan against remembered conditions. Deal count, structure and cash-at-close have all moved, and a plan calibrated to 2021 produces a disappointment at signing rather than at planning.

Ackerman reports roughly 350 US corporate veterinary transactions in each of 2024 and 2025, against more than 1,000 at the 2021 peak, while broker penetration of the sell side rose from about 20% in 2021 to about 70% in 2025. Cash at closing averaged 64% in the first half of 2025; 81% of hospitals received 70% or more cash in 2024 versus only 50% in 1H25. Weighted-average purchase-price multiples on Ackerman's closed general-practice transactions were 12.5× EBITDA in 2025 and 13.3× in Q1 2026, in a stated market range of 8× to 15×. Separately, Capstone Partners counts 66 private-equity platforms formed in the Pet sector between 2019 and 2022 against only 9 exits from 2023 to date — aging inventory that makes buyers more selective.

Ackerman Group 2025 Q2, 2025 Q4 and 2026 Q1 Veterinary Industry Market Updates; Capstone Partners Pet M&A Coverage Report (March 2025) and Pet Sector Update (April 2026). Scope caution: Capstone reports the PET sector, not veterinary practices specifically, and Ackerman's transaction-count estimate carries no named upstream source.

NOT THIS IF — The plan already assumes a rollover or joint-venture component and a cash-at-close below 70%. Then it is calibrated to the market that exists.

HOW TO TELL THEM APART

How to tell these apart in your own numbers

Each of these is a measurement you can run yourself, without us.

01 · Revenue growth is entirely ATC and the transaction trend is negative

Split trailing 36 months into transactions × ATC, by month, same-store. Compute the compound growth rate of transactions on its own — transactions per hospital per month is the series a buyer will rebuild anyway, so build it first.

CONFIRMS IF

Transaction CAGR is negative or zero. That is the number a buyer will underwrite, regardless of what the revenue line did, and it should be the number you plan against.

EXCLUDES IF

Transaction CAGR is positive across three years. Make it the headline of the story — against a sector running −1.9% same-store, it is the differentiator.

02 · The practice is the owner

Owner production as a share of total DVM production, and the share of active clients whose transactions in the last twelve months were predominantly with the owner. Write down the lookback window you used.

CONFIRMS IF

The owner is a large share of production, or a large share of the active client base transacts primarily with the owner. Both convert directly into holdback, earnout or a lower multiple.

EXCLUDES IF

Owner production is proportionate to headcount and clients are distributed across DVMs.

03 · Associate retention is unresolved — and buyers now price it explicitly

For each associate: tenure, contract term, notice period, non-compete status, and DVM production. Then model the transaction value at risk if any one of them leaves within twelve months of close.

CONFIRMS IF

Associates are at-will or near the end of term. At current market levels the retention cost is running above $140,000 per associate in small practices and 4.1% of transaction value — money that comes from somewhere, and if it is not pre-planned it comes from the seller.

EXCLUDES IF

Signed multi-year terms are in place that survive a change of control.

04 · The books have never been normalized, so diligence rebuilds them — downward

Re-cast 36 months of the P&L onto the AAHA/VMG Chart of Accounts before speaking to any buyer or broker. Document owner compensation, related-party rent and the real-estate entity structure separately.

CONFIRMS IF

The re-cast changes EBITDA materially, or categories cannot be reconstructed from the existing ledger. Fix it before diligence rather than during it.

EXCLUDES IF

The statements re-cast cleanly with documented add-backs.

05 · The window has changed and the plan was built for the old one

Write down the assumed cash-at-close percentage, the assumed multiple and the assumed timeline, then compare them to Ackerman's published closed-deal figures for the most recent quarter — 64% average cash at close in 1H25, 12.5× weighted-average in 2025 and 13.3× in Q1 2026 in an 8× to 15× range.

CONFIRMS IF

The plan assumes cash-at-close above 70% or a multiple outside the published range. Recalibrate now, while there is still time for the operating work to matter.

EXCLUDES IF

The plan sits inside the published bands and already contemplates rollover or a joint venture.

WHAT RESOLVES EACH

What resolves this, and how you will know it resolved

Revenue growth is entirely ATC and the transaction trend is negative	Rx 03 · patient conversion →	The only durable fix is transaction volume, and there is a runway if the work starts early enough — Vetsource's own quartile analysis found the top 25% of practices by visit maintenance grew visits 10% year over year while holding average client transaction essentially flat at +0.14%. What does not work is a pre-sale price increase: it inflates the revenue line, degrades the volume trend the buyer is actually underwriting, and is visible in the data.
The practice is the owner	Rx 05 · preparing for sale →	Owner-independent systems are what buyers price. This means transferring clinical load and client relationships onto associates and a medical director well before the process starts — twelve months is workable, three is not.
Associate retention is unresolved — and buyers now price it explicitly	Rx 05 · preparing for sale →	Handled as a diligence workstream, not a personnel one. The cost is now an explicit and growing line in transaction value, so it should be modelled in the seller's own numbers before a buyer models it for them.
The books have never been normalized, so diligence rebuilds them — downward	Rx 04 · marketing attribution →	Clean books become the diligence story. Reporting that has run monthly on the AAHA/VMG taxonomy for two years is worth more than the same information assembled in a data room, because it demonstrates that the business was managed on it.
The window has changed and the plan was built for the old one	Rx 05 · preparing for sale →	Banker-ready narrative and multiple-modelling built off the published closed-deal data rather than off remembered 2021 conditions. Where the honest answer is that the practice is not ready and should wait, that is the answer — and if the gap is a negative transaction trend, no narrative closes it.

WHAT "RESOLVED" LOOKS LIKE — Weighted-average purchase-price multiple on closed general-practice transactions, supported by a positive same-store transaction trend

MEDIAN

12.5× EBITDA weighted average across Ackerman's closed 2025 general-practice transactions; 13.3× in Q1 2026; 12.3× simple average in Q1 2026. Stated market range 8× to 15×.

TOP DECILE

Ackerman describes a top tier at 16×+, and reports one platform recapitalization at 17–18× EBITDA. That is platform-scale, not single-practice, and should not be a single-site target.

TARGET

The upper half of the 8× to 15× band, with cash at close at or above the 64% average Ackerman reported for the first half of 2025, and a same-store transaction trend that is flat or positive against a sector running −1.9%. A multiple is an outcome of a negotiation, not a deliverable — the deliverable is the volume trend, the owner-independence and the normalized books that make the upper half of the band arguable.

Ackerman Group 2025 Q2, 2025 Q4 and 2026 Q1 Veterinary Industry Market Updates. Population limit stated by Ackerman: its own closed deal book, roughly 14% of US corporate veterinary transactions, sell-side brokered and therefore skewed toward larger and more attractive practices. Capstone Partners' 11.1× EV/EBITDA is a PET SECTOR figure, not a veterinary-practice figure, and is not a substitute.

HOW THIS DIFFERS BY SCALE

How this differs by scale

Single site	One hospital, and the owner is usually the top producer — so owner-independence is the dominant workstream and it is the slowest one. Note that Monarch describes the buyer's preferred profile as four to five full-time associates and over $500K of EBITDA (no methodology or deal count disclosed), against an all-practice average of 2.76 FTE veterinarians. A typical single practice is below the profile that attracts competitive bidding, and the honest planning conversation starts there.
Group	Four to twenty sites, and the buyer's question becomes whether the group's performance is a system or a collection. Same-store transaction growth reported to one definition across all sites is the evidence; a blended growth rate that includes acquisitions is the thing that gets re-cut in diligence, and it gets re-cut downward.
Platform	Twenty-plus sites, where the market context is itself a diligence input: 66 private-equity platforms were formed in the Pet sector between 2019 and 2022 and only 9 have exited since 2023, five of those sponsor-to-sponsor. Aging sponsor inventory means the buyer pool is more selective and more sponsor-to-sponsor than it was, which raises the bar on same-store evidence rather than on the story.

OTHER PRESENTATIONS — VETERINARY GROUPS

A differential narrows the field. It does not replace the examination — that is what the six weeks are for. Every figure above is an industry reference range, not a client's numbers; those stay sealed. Sources are set out at /sources.

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