How Access to Due Diligence Can Harm Your Veterinary Services Business
A buyer reviews your due diligence materials including DVM pay, productivity, benefits, tenure, all of it for every DVM on your team. That buyer declines to submit a letter of intent. Six months later one of that buyer’s recruiters calls your best-producing DVM with a better offer: more pay, more PTO, better benefits. Your DVM leaves.
Here’s a second version of the same problem. A buyer who owns a practice across town reviews your service pricing during due diligence. They also pass on making an offer. Two months later, they drop their spay and neuter pricing, and you start losing clients to them.
Neither buyer did anything illegal, necessarily. That’s what makes this worth talking about.
Your people are the asset, and that’s the focus of due diligence
In many business sales, due diligence is about intellectual property, pipeline, or physical assets. In a veterinary practice sale, it’s about people. Buyers need to know your DVMs and practice managers, what they’re paid, how productive they are, and what it would take to keep them happy and productive through an ownership transition.
Access to this kind of information before submitting a letter of intent is a reasonable ask from a serious buyer. It’s also, if you’re not careful, a free look at your business trade secrets for anyone who conducts due diligence but decides not to buy.
Most people in this industry aren’t out to poach your staff or undercut your prices. I’d guess the majority of buyers who pass on a deal use the information learned only to better understand their current operations. But veterinary medicine is a competitive business, and it would be naive to assume nobody in a competitive market takes an edge when they see one. In today’s market, data used well, can seed such an edge.
NDAs help. They don’t cover everything
A non-disclosure agreement is step one, and it’s non-negotiable. Sign one with every potential buyer before you share anything non-public, even buyers who’d never directly compete with you. When the buyer is a direct competitor, a tight non-disclosure agreement is critical.
These agreements should also include a non-solicit: a clause that keeps either side from using what they learned in due diligence to poach the other’s staff.
Non-solicits matter most where your key assets are people, which makes them especially relevant for veterinary practices. But in this industry, they’re inconsistently used. A lot of corporate buyers won’t agree to one, and often not for a sinister reason: their recruiting team and their acquisitions team aren’t integrated. A recruiter can violate a non-solicit the company’s business development group signed without anyone at that company realizing it happened.
And most brokers don’t push hard enough to require one.
Even a well-drafted NDA and non-solicit are hard to enforce. Proving a company stole trade secrets or violated a non-solicit takes real evidence (this $800 million verdict is a rare example of behavior bad enough to make that case easy). Most situations aren’t that clear-cut. Treating paperwork as your only protection is a gamble in a competitive industry
Your data should not be freely available
I saw a broker post on LinkedIn recently, celebrating a deal where eight offers were submitted. That’s not a win in my book. It means seven people who didn’t buy the practice now know more about that seller’s business than they should.
Even if every one of those seven signed a non-solicit, which is unlikely, they all still have information they could use to solicit employees from the practice if they wanted to. If the seller sold 100% of her stake at close, the downside is limited. But all-cash at close deals at are rare in veterinary services. And if the deal falls through entirely, the seller is left exposed, not because of anything she did, but because she and her broker weren’t careful with their due diligence data.
How VetValue limits your exposure
Our Connect platform is built around controlling exactly who sees what, and when. Every buyer signs their own NDA with you directly, not a blanket, template agreement between the brokerage and a buyer. Buyers who won’t agree to a non-solicit get different, redacted materials until their letter of intent is selected. At every stage, buyers see only what they need to decide whether to move forward, nothing more. The result is that only those whose have proven themselves to be serious purchasers have access to your key data.
That’s the protection a seller actually needs: not a porous document you hope holds up later, but a process that limits who sees the sensitive stuff in the first place.
Learn more about Connect here.