Yes, several factors can decrease the value of a veterinary practice, and most are related to financial instability, high owner dependency, inconsistent staffing, inefficient operations, or declining client retention. Corporate buyers and individual buyers both reduce their valuation multiples when they see higher risk or lower predictability in future earnings.
Understanding what hurts valuation helps practice owners correct issues before going to market — often improving final sale price by 20 to 40 percent.
1. Declining or Inconsistent Revenue
One of the biggest value reducers is unstable financial performance.
Buyers discount practices that show:
- Year-over-year revenue declines
- Seasonal volatility without explanation
- Irregular month-to-month swings
- Sharp drops in client visits
Why it decreases value:
Unpredictable revenue = higher buyer risk = lower multiples.
2. Weak or Negative EBITDA
If the practice shows:
- Low profitability
- High expenses
- Limited add-backs
- Negative or inconsistent EBITDA
…buyers will reduce the valuation or avoid the deal entirely.
Why it decreases value:
EBITDA is the primary valuation metric — weak EBITDA means weak pricing.
3. High Owner Dependency
Corporate buyers strongly discount practices where:
- The owner is the primary veterinarian
- Clients demand the owner specifically
- The business cannot function independently
- No associates or unreliable associates
Why it decreases value:
If the owner leaves, revenue collapses — and buyers price accordingly.
4. Associate Veterinarian Turnover
If a practice struggles to keep veterinarians, buyers see:
- Unreliable revenue
- Cultural or management problems
- Increased hiring and training costs
Why it decreases value:
Replacing vets is costly and difficult; turnover increases perceived operational risk.
5. Poor Client Retention or Declining Visit Volume
Buyers track:
- Active client count
- Frequency of visits
- Compliance metrics (dentals, vaccines, preventatives)
- New client acquisition trends
Why it decreases value:
A shrinking client base means declining future earnings.
6. Inefficient Operations and Lack of Systems
Value decreases when a practice has:
- Poor scheduling efficiency
- Weak inventory controls
- No standardized medical protocols
- High overtime costs
- Missing or outdated SOPs
Why it decreases value:
Inefficiency reduces profitability and increases buyer workload after acquisition.
7. Outdated Equipment or Facility Issues
Buyers discount practices when:
- X-ray or lab equipment is outdated
- Surgery suite requires upgrades
- Exam rooms are deteriorating
- HVAC, lighting, or flooring needs repair
Why it decreases value:
Buyers factor in renovation or equipment replacement costs.
8. Weak Practice Management or Leadership Issues
Common red flags include:
- Ineffective practice manager
- Poor staff culture
- No training systems
- High turnover
- Unclear roles or responsibilities
Why it decreases value:
Weak leadership = operational instability.
9. Messy or Incomplete Financial Records
This is a major deal killer.
Buyers penalize practices with:
- Disorganized P&Ls
- Inaccurate inventory accounting
- Missing tax filings
- No add-back documentation
- Commingled personal expenses
Why it decreases value:
Messy books create doubt and slow due diligence — buyers respond by lowering offers.
10. Compliance Problems or Legal Risks
Buyers reduce offers if they find:
- OSHA violations
- Regulatory compliance issues
- Medical record inconsistencies
- DEA or controlled substance problems
- Unresolved client disputes or lawsuits
Why it decreases value:
Legal risk reduces valuation and scares lenders.
Summary: What Decreases Veterinary Practice Value
| Value Reducer | Why It Lowers Valuation |
|---|---|
| Declining revenue | Unpredictable earnings increase risk |
| Weak EBITDA | Low profitability reduces multiples |
| Owner dependency | Revenue not transferable |
| Associate turnover | Operational instability |
| Poor client retention | Declining visit volume |
| Inefficient operations | Higher buyer costs |
| Outdated equipment | Immediate capital investment needed |
| Weak management | Harder integration |
| Messy financials | Slows due diligence, reduces trust |
| Compliance issues | Legal and regulatory risk |
Final Takeaway
The value of a veterinary practice decreases when financial performance is unstable, operations lack efficiency, the practice is too dependent on the owner, or the clinic shows signs of decline in client volume or medical staffing. By addressing profitability, retaining associates, improving workflows, updating equipment, and preparing clean financial records, owners can protect and often significantly increase their valuation before going to market.