Buying a Veterinary Practice in Ontario: Legal Considerations for Veterinarians

Purchasing a veterinary practice is a significant professional and financial decision. Many veterinarians consider acquiring an existing clinic as a way to establish ownership, expand their professional opportunities, and build long-term value within their practice.

However, buying a veterinary clinic involves more than simply purchasing medical equipment and patient records. Veterinary practice acquisitions typically involve detailed agreements, financial due diligence, and regulatory considerations. Veterinarians considering the purchase of a practice should carefully review the legal structure of the transaction before proceeding.

Structuring the Veterinary Practice Purchase

Veterinary practice acquisitions are typically structured as either an asset purchase or a share purchase.

Asset Purchase

In an asset purchase, the buyer acquires specific assets of the veterinary clinic rather than purchasing the corporation itself.

These assets may include:

• medical equipment

• clinic furniture and technology

• inventory and supplies

• client records and goodwill

• leasehold improvements

Asset purchases are common in professional practice transactions because they allow buyers to select which assets they wish to acquire.

Share Purchase

In a share purchase, the buyer acquires the shares of the corporation that owns the veterinary clinic.

This structure means the buyer takes ownership of the corporation along with its assets and liabilities.

Share purchases may offer certain tax advantages, but buyers often conduct more extensive due diligence when acquiring shares.

Conducting Legal Due Diligence

Before purchasing a veterinary clinic, buyers should conduct thorough legal due diligence.

Due diligence typically includes reviewing:

• corporate records of the clinic

• existing contracts and supplier agreements

• employment or associate agreements

• equipment ownership documentation

• regulatory compliance matters

The purpose of due diligence is to identify potential risks or liabilities that may affect the value of the practice.

Reviewing the Clinic Lease

For many veterinary clinics, the lease for the clinic premises is one of the most important documents in the transaction.

Buyers should review the lease carefully to understand:

• the remaining lease term

• rent escalation provisions

• renewal options

• whether the lease can be assigned to a buyer

In many cases, the landlord must approve the assignment of the lease to the new owner before the transaction can close.

Purchase Agreement Terms

The veterinary practice purchase agreement governs the legal terms of the transaction.

These agreements often include provisions relating to:

• the purchase price and payment structure

• assets included in the sale

• representations and warranties made by the seller

• conditions that must be satisfied before closing

Careful review of the purchase agreement is important to ensure that the terms of the transaction are clearly defined and that potential risks are addressed.

Restrictive Covenants

Veterinary practice purchase agreements commonly include restrictive covenants that limit the seller’s ability to compete with the clinic after the sale.

These provisions may restrict the seller from:

• opening another veterinary clinic within a specified geographic area

• working for a competing clinic nearby

• soliciting clients from the practice

Restrictive covenants are intended to protect the goodwill of the veterinary practice being purchased.

Regulatory Considerations

Veterinary practices in Ontario must comply with professional regulatory requirements.

Buyers should ensure that the structure of the practice and ownership arrangements comply with the rules of the relevant regulatory bodies governing veterinary medicine.

Ensuring regulatory compliance is an important part of the acquisition process.

Why Legal Advice Matters When Buying a Veterinary Practice

Veterinary practice purchases involve significant financial investment and complex contractual arrangements.

Legal guidance can help veterinarians:

• review and negotiate purchase agreements

• address lease assignment issues

• structure the transaction appropriately

• identify potential risks during due diligence

Careful legal review can help ensure the transaction proceeds smoothly and that the buyer’s interests are protected.

Speak With a Lawyer Before Buying a Veterinary Practice

Veterinarians considering the purchase of a veterinary clinic should carefully review the legal terms of the transaction before signing a purchase agreement.

If you are considering buying a veterinary practice or reviewing a veterinary clinic purchase agreement, you may wish to obtain legal advice before proceeding.

You can Book a Consultation to discuss your situation and determine the appropriate next steps.