Veterinary Practice Due Diligence
Due diligence is where a deal either gets confirmed or gets repriced. The purpose is not to find a reason to walk away. It is to know exactly what you are buying so the price, the warranties and the first year plan reflect reality.
What We Test
- Quality of earnings
- Whether reported EBITDA is sustainable, which adjustments are legitimate, and what a normalised figure looks like under your ownership rather than the seller.
- Revenue analysis
- Income by stream and by fee earner, client concentration, plan membership and churn, and how much revenue walks out with the departing owner.
- Working capital
- The normal level the business needs to trade, so the completion mechanism does not leave you funding a hole on day one. Insurance debtors and stock are the two that move.
- Staffing and rota reality
- Contracts, holiday accrual, notice periods, locum reliance and whether the rota works without the seller in it.
- Stock and medicines
- Valuation basis, short dated and expired stock, and whether the recorded position matches what is on the shelf.
- Tax exposures
- PAYE and employment status on locums, VAT treatment on plans, unresolved HMRC matters and anything requiring an indemnity.
- Commitments
- Equipment finance, leases, out of hours contracts, supplier agreements and anything with an unreasonable notice period.
How Findings Are Used
Findings do one of three things. They change the price, they become a warranty or indemnity in the sale agreement, or they become a task in your first hundred days. Every material finding should end up in one of those three places rather than in a report nobody acts on.
We report as we go rather than delivering everything at the end. If something is found in week one that changes whether you want to proceed, you should hear about it in week one, not after you have paid for the full exercise.
How the Scope Is Set
Due diligence can be as large as you are willing to pay for, and beyond a point the additional work stops earning its cost. We agree the scope against the size of the deal and the specific risks in it, and we tell you what we are not covering as clearly as what we are.
On a single site first opinion practice, a focused exercise on earnings quality, working capital, employment status and commitments covers most of the real risk. On a multi-site group or where the seller has an unusual structure, the scope widens because the places a problem can hide multiply.
- Run it alongside the legal work, not after
- Financial findings shape the warranties your solicitor negotiates. Sequencing them one after the other wastes time and weakens both.
- Agree the information request early
- The constraint is almost always how quickly the seller produces information. Getting the list to them at the start of exclusivity rather than the middle saves weeks.
- Keep a note of what you were told
- Representations made during the process that do not make it into the agreement are worth very little afterwards. Track them so they can be captured properly.
Frequently Asked Questions
How long does financial due diligence take?
Is it worth it on a smaller practice?
Can you look at a practice before we make an offer?
Does this replace our solicitor?
What is a completion accounts mechanism and do we need one?
How much does financial due diligence cost?
Get the Numbers Tested Before You Commit
If you are under offer or close to it, tell us the timetable and we will set out a diligence scope that fits it.