Using KPIs to Improve Practice Valuation Before You Sell or Expand

Whether you dream of selling your veterinary practice in a few years or expanding to a second location, one thing is certain: your practice’s value is directly tied to its performance and your ability to prove it. You may find yourself looking to list the practice for sale or to acquire a loan for expansion or acquisition of another practice and these KPIs will influence the willingness of the parties on the other side of the table to work with you – whether it be a buyer or a banker.

We have talked about KPIs for practice decision making purposes in driving success, while here is how tracking and improving the right KPIs can significantly boost your practice’s valuation potential.

Why Valuation Is About More Than Just Revenue

When buyers or banks assess a veterinary practice, they don’t just look at top-line revenue. They want to see consistent profitability, predictable cash flow, operational efficiency, sustainable growth trends and strong client and employee retention.

KPIs That Strengthen Practice Value

1. Profitability Metrics

EBITDA Margin: Buyers and banks focus on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) because it shows “true” operating income. A healthy, consistently growing EBITDA margin dramatically increases valuation multiples.

2. Revenue Quality Metrics

Revenue Diversity: A strong mix of services shows the practice is not overly reliant on one income stream and makes the practice more resilient.
Revenue per doctor: Higher productivity per veterinarian indicates efficient operations and strong client demand.

3. Client Retention and Growth Metrics

New Client Growth Rate: Sustainable, steady acquisition signals practice vitality.
Client Retention Rate: A high retention rate shows loyal clients and predictable future income.

4. Staff Stability Metrics

Employee Turnover Rate: High staff turnover damages both operational performance and perceived value.
Team Utilization: Proper technician and support staff leverage improves doctor productivity and profitability.

5. Operational Efficiency Metrics

Average Invoice Value (ATV): Optimized ATV indicates strong client education, service bundling, and overall practice performance.
Accounts Receivable Turnover: Low outstanding receivables show efficient cash collection and healthy cash flow.

How to Use KPIs to Actively Improve Value

1. Benchmark and Set Targets Work with a veterinary-savvy business advisor to compare your KPIs to industry standards and set realistic improvement targets. Keeping in mind that smaller practices may be outside of usable industry standards due to the number and volume.

2. Focus on Trendlines, Not Snapshots Buyers and lenders want to see positive trends over 12-36 months, not just one strong year. Start building upward momentum now. A practice focused on sustainable growth will already be working on their numbers periodically but a practice approaching a meaningful milestone, must double down (or start if not already doing so) on the numbers, KPIs and trends to meet your milestone objectives, whatever that may be.

3. Document, Document, Document – in previous blogs we have talked about tracking progress periodically, but make sure this is done consistently and purposefully. Link KPIs to Operational Improvements, don’t just “watch the numbers.” Please see previous blogs for what metrics and KPIs to monitor for profitability, growth and sustainability. Keep in mind that small operational improvements compound into significant valuation increases over time. Therefore it is paramount to start as early as possible, not only for operational benefit but long-term goals.

Timing Matters: Start Early

If you’re thinking about selling or expanding in the next 3–5 years, start managing your KPIs like you’re preparing for due diligence today. Last-minute “window dressing” rarely works. Buyers are savvy, and banks want to see sustained performance improvements, not quick fixes.

Consistent KPI tracking and improvement over multiple years dramatically strengthens your position when it’s time to negotiate terms.

KPIs Become Your Business Story

When it’s time to sell, expand, or bring in partners, your practice’s KPIs tell the story of your leadership, discipline, and vision. Use KPIs now not just as internal tools, but as strategic assets that build the value of what you’ve worked so hard to create.

Start early, track consistently, and invest in improving the metrics that matter most. When opportunity knocks, you’ll be ready to answer with confidence.