From Associate to Owner: Navigating the Path to Veterinary Practice Ownership

For many veterinarians, the idea of practice ownership is both exciting and intimidating. Running a clinic means more than caring for patients; it means managing a business. Ownership offers many opportunities, but it also brings new responsibilities and risks.

If you’re an associate veterinarian considering this step, understanding the available paths, deal structures, and regulatory requirements is key to making the transition with confidence.

Why Make the Transition?

Ownership is more than simply “running the show.” It can open the door to increased income potential, greater autonomy in clinical and business decisions, and equity that builds long-term wealth. Ownership also brings the opportunity to shape the culture of the practice and lead a team.

Of course, these rewards come with trade-offs. Owners must manage compliance, staffing, operations, and finances while protecting against legal and business risks. That’s why this decision should be approached with intention.

Paths to Ownership

Veterinarians typically take one of three routes into ownership:

• Acquisition: Purchasing 100% of a practice from a retiring or exiting owner. Acquisitions may be structured as either an asset or equity purchase.

• Buy-in: Purchasing a minority or majority interest in an existing practice, sometimes phased in over time. This can provide a smoother transition, but usually requires negotiating complex valuation terms and clear exit provisions.

• Startup: Building a new practice from the ground up. Startups require entity formation, financing, and regulatory groundwork, but give owners complete control from day one.

  
  

Each path comes with different legal and financial implications, underscoring the importance of early guidance from both legal counsel and a CPA. In this article, we’ll break down considerations for each of the three pathways. 

Considerations for Acquiring a Veterinary Practice Deal 

Asset vs. Equity Purchases

Considering buying a practice? The way a transaction is structured matters just as much as the purchase price. In veterinary and other healthcare transactions, two approaches are most common:

Asset Purchase: The buyer acquires specific assets (such as equipment, goodwill, and client lists) and assumes only agreed-upon liabilities, if any. This “fresh start” approach helps avoid legacy issues like unpaid debts or lawsuits, but can be more of an administrative burden, as you have to establish vendor agreements and leases in the new entity name. As a plus for buyers, an asset purchase generally has significant tax benefits.

Equity Purchase: In a stock purchase (for a corporation) or membership interest purchase (for a limited liability company or LLC), the buyer acquires the equity of the existing entity and effectively steps into the seller’s shoes. This is a more seamless transition, though it comes with a significantly increased chance of “successor liability” (when a buyer “inherits” the debts of a seller), as well as less tax benefits for a buyer. Thorough due diligence is critical before closing, and generally, there is some outside reason for pursuing this type of transaction.

The right structure depends on the circumstances. Tax treatment, liability exposure, and regulatory approvals vary, so veterinarians should seek both legal and tax advice before signing.

Due Diligence and Compliance

Due diligence is non-negotiable. Buyers should carefully review financials, tax history, vendor contracts, leases, licensing, and veterinary board compliance. Red flags such as pending investigations or undisclosed liabilities can significantly impact value and risk.

In addition, buyers must be mindful of the Corporate Practice of Medicine (CPOM). This is a legal doctrine which, in many states, restricts ownership of veterinary practices to licensed veterinarians, limiting the ability to partner with unlicensed individuals and investors. In these scenarios, a buyer may be able to utilize a Management Services Organization (MSO) model.  In addition, many states require formation of a professional corporation (PC) or professional limited liability company (PLLC) to operate a veterinary practice. Rules vary widely by jurisdiction, making legal guidance essential.

More Tips for a Smooth Acquisition: 

• Engage advisors early. Bring in legal, financial, and tax counsel before signing a Letter of Intent to avoid surprises later.

• Scrutinize the lease. Confirm transferability and ensure terms align with your long-term plans.

• Plan for transition. Negotiate seller support, staff retention strategies, and communication to clients to help preserve goodwill.

  
  

Veterinary Practice Buy-In 

What does the buy-in process look like? 

In an associate buy-in, the practice owner and associate must come to agreement on the terms of the deal. Here’s the process: 

• A valuation must first be placed on the business

• Legal and financial teams conduct due diligence

• Define payment arrangements and employment terms, including initial investment, how the practice is purchased over time, if there is a time-period of employment, or other factors 

  
  

Buy-Ins Explained: Employment, Governance, and Exit Planning

For associates buying into a practice, employment terms are often intertwined with ownership. Key considerations include how compensation will be structured (W-2 wages plus profit distributions), whether restrictive covenants will be revised to reflect ownership status, and how employment agreements will coexist with ownership rights.

Co-ownership can be rewarding, but it requires a clear governance framework. A well-drafted operating or shareholder agreement should address voting rights, profit distribution methods, buy-sell provisions, and deadlock resolution procedures. Without this structure, partnerships risk devolving into disputes.

Key Considerations in Your Buy-In Agreement

• Valuation of the Practice: This might involve a formal appraisal, looking at revenue, profit margins, patient base, and any other factors that influence the practice's worth.

• Equity and Profit Sharing: After the associate buys a share of the practice, they are granted equity. Along with the equity stake, the associate would receive a share of the practice’s profits, typically distributed on a quarterly or annual basis.

• Ownership Restrictions and CPOM: Many states will restrict the ownership of medical practices to licensed healthcare professionals. Determine if an MSO structure is necessary.

• Debt or Liabilities: Consider whether the practice has existing debt, and if the associate will need to assume a portion or adjust the buy-in amount. 

• Exit Strategy: The buy-in agreement often includes terms for how an associate can sell their stake if things don’t go as planned. 

  
  

Veterinary Practice Start-Up

De Novo: The Process of Starting Your Practice from the Ground Up

The final ownership method is to start a practice from the ground up. If you have the funding to do so, starting your own practice offers you the opportunity of full control of the practice from day one. It also comes with its own set of challenges, however. You may be faced with a slower ramp up time and a higher up-front workload to get up and running. Here are a few steps you’ll need to cover if you take this route: 

• Entity Formation and Licensing: Form the appropriate legal entity and secure all required professional licenses, state veterinary board registrations, and DEA registration.

• Business Planning and Financing: Create a detailed business plan and secure financing through a bank loan, SBA loan, or private investment. Lenders will typically require detailed projections and collateral.

• Site Selection and Lease Negotiation: Negotiate a favorable lease or purchase agreement, keeping long-term growth in mind.

• Compliance and Insurance: Obtain necessary permits (local zoning, building occupancy, waste disposal). Secure liability insurance, malpractice coverage, and worker’s compensation policies.

  
  

Final Thoughts

Moving from associate to owner is one of the most rewarding steps in a veterinarian’s career, but also one of the most complex. Whether through a buy-in, acquisition, or startup, veterinarians must navigate deal structure, contracts, compliance, and governance along the way.

At Marti Law Group, we help veterinarians evaluate opportunities, structure transactions, and protect their interests throughout the ownership journey.

If you’re considering a buy-in offer or preparing to start your own practice, our team is here to guide you from associate to owner with confidence.

FAQs About Veterinary Practice Ownership

Q: What’s the best way for an associate veterinarian to become an owner?

A: There’s no single “best” path. Options include buying into an existing practice, acquiring a practice outright, or starting one from scratch. The right choice depends on your goals, finances, and risk tolerance.

Q: What is the difference between an asset purchase and an equity purchase?

A: In an asset purchase, you buy specific assets of the practice and generally avoid legacy liabilities, though it may be a heavier administrative lift to switch everything to a new legal entity. In an equity purchase (stock purchase or membership interest purchase), you step into the existing entity and avoid some of the added administrative burden, but you may inadvertently assume the practice’s liabilities and lose out on substantial tax benefits realized in an asset purchase.

Q: Can non-veterinarians own a veterinary practice?

A: It depends. The Corporate Practice of Medicine (CPOM) Doctrine requires that only licensed veterinarians can own or control a veterinary practice. Each state has different rules, so legal advice is critical to determine if you fall into a CPOM state or not.

Q: Do I need a lawyer to buy into or start a veterinary practice?

A: Yes. Veterinary practice ownership involves complex legal, financial, and regulatory issues. An attorney experienced in healthcare and veterinary transactions can help structure the deal, ensure compliance, and protect your interests.