The improvements that create the most value before selling a veterinary practice are not always dramatic. In Part 3, we focus on practical changes—inventory, labor, personal expenses, and pricing—that can strengthen profitability and make the practice easier for a buyer to understand.

Quick answer: To increase veterinary practice value before a sale, focus on improvements that strengthen documented EBITDA: manage inventory, improve revenue productivity, review labor as a percentage of revenue, stop suppressing profit with personal expenses, and keep the fee schedule current.

The Full Guide

Nobody dreams of becoming a veterinarian so they can obsess over inventory reorder points. But if you’re thinking about your practice’s eventual value, a handful of unglamorous, entirely fixable habits can move your sale price more than almost anything else you’ll do. Here’s why they matter so much, and where to start.

The math that makes “small” fixes big

At a typical valuation multiple, every dollar of avoidable inefficiency in your annual earnings doesn’t just cost you a dollar — it costs you a multiple of that dollar at the sale table. At a 10x multiple, running a personal expense through the business for a 40-cent tax deduction can cost you $10 in eventual sale price. That’s a genuinely bad trade, and it’s one almost every practice owner has made at some point, usually without thinking twice about it.

Fix #1: Inventory

Inventory is typically the second-largest expense in a veterinary clinic after labor, and in most practices, it’s essentially unmanaged. The average veterinary clinic today carries roughly $150,000 of excess inventory — product sitting on shelves that isn’t earning its keep. Many practices don’t even have inventory properly loaded into their practice management system, which also means they couldn’t prove what they own if something happened to it.

The fix is straightforward, if not exactly thrilling: load your inventory into your PMS, run cycle counts on high-value items, tighten your reorder points, and rationalize redundant SKUs. You almost certainly don’t need five different flea preventives and six heartworm products taking up shelf space. Every dollar you’re not carrying in excess inventory falls straight to your bottom line.

Fix #2: Labor as a percentage of revenue

Labor should generally run around 45% of gross revenue. If yours is running significantly higher — say, 55% — that’s worth investigating, but not necessarily by cutting staff. More often than not, the real issue is that revenue isn’t where it should be, frequently because of scheduling inefficiencies or because doctors are working fewer hours than they were a few years ago. Fix the revenue side first, and the ratio often corrects itself.

Fix #3: Personal expenses running through the business

This one requires an honest look in the mirror. For most of your career, minimizing taxable income through the business has made sense. But if you’re within a couple of years of a transition, the math flips entirely. If it’s not on your tax return, it doesn’t exist to a buyer — meaning every personal expense you’ve been running through the practice is actively suppressing the number your valuation multiple gets applied to. In the final stretch before a sale, the goal shifts from minimizing tax liability to maximizing demonstrated profitability.

One more lever: your fee schedule

Here’s a number that tends to get owners’ attention. As a rule of thumb, expect roughly 4,000–5,000 transactions per year per full-time doctor. In a four-doctor practice, that’s around 20,000 transactions annually — which means being underpriced by just $5 a transaction can mean $100,000 in lost annual profit. At a typical multiple, that’s roughly $1,000,000 off your eventual sale price. If you haven’t reviewed your fee schedule in the last three years, this is one of the highest-leverage, most fixable mistakes to correct.

None of this requires a timeline

The good news buried in all of this: these aren’t “getting ready to sell” tactics. They’re just good practice management, full stop. Tightening inventory, right-sizing labor, and pricing appropriately will make your practice healthier and more profitable whether you sell next year or never sell at all. If a transition is somewhere in your future, though, addressing these now — rather than in the final year — gives the improvements time to show up clearly in your financial history, which is exactly what a buyer wants to see.

Not sure where your own numbers actually stand? A candid conversation can help you see the picture clearly, with no obligation attached.

These changes are not cosmetic preparation for a buyer. They are sound practice-management habits that can improve cash flow now and create a stronger financial history later. In Part 4, we move beyond the numbers to the factor buyers often evaluate first: culture.

Frequently Asked Questions

What changes can increase veterinary practice sale value?

Reducing excess inventory, improving pricing, strengthening revenue productivity, and clearly documenting true operating expenses can improve demonstrated profitability.

Should I stop running personal expenses through the practice before selling?

Owners approaching a sale should discuss this with their CPA because personal expenses can suppress the profitability a buyer uses in valuation.

How often should a veterinary hospital review fees?

A regular fee review helps ensure pricing reflects current costs, market conditions, and the value of care. Long gaps can create significant lost revenue.

Considering the future of your veterinary practice? Start a confidential, no-pressure conversation at businessdevelopment@carevethealth.com.