What does a veterinary bank look for in a practice being acquired to decide if they want to finance it?

A practice should have growing revenues with a cash flow margin above 25% before an owner’s salary is usually viewed favorably. If a practice’s revenue has been declining or if the margins have been poor, it requires a more in-depth analysis. Has the current doctor been cutting hours, leading to lost revenue? Is the practice not generating good margins due to the owner being out ill and paying relief veterinarians? What expenses can be added back that will not reoccur in the future? What is the acquiring doctor’s experience level? Has he or she practiced in this market before? All lenders’ analyses revolve around whether the practice can support the debt service and the owner’s cash requirements going forward.