All veterinarians seeking to open their first practice must address the same preliminary, yet pivotal consideration on their road to practice ownership: “how do I go about opening my own practice?” On one hand, some first-time practice owners elect for the traditional start-up route, building the practice and its client base from the ground up. On the other hand, some veterinarians wish to forgo the often-tedious start-up process, and instead seek to “hit the ground running” by acquiring all the equipment, inventory, and clientele of an established veterinary practice. However, the concept of purchasing a veterinary practice can be an intimidating venture for those unfamiliar with the process. In an effort to provide first-hand insight on the practice acquisitions, the attorneys of Mandelbaum Barrett PC’s National Veterinary Law Group sat down with a current client that recently closed on their first veterinary practice acquisition for a brief Q&A:
Q: Prior to becoming a veterinary practice owner, what aspects of practice ownership did you find most appealing?
A: Definitely career growth, both professionally and financially. I was becoming frustrated by the lack of opportunities beyond that of an associate veterinarian or “medical director” for a corporation. I didn’t feel that either path provided adequate upside, and both seemingly pigeonholed me into doing the same things for the rest of my career. The opportunity to help grow a practice and have skin in the game, while also getting involved in other aspects of the business beyond the medicine, was very appealing and has already been extremely rewarding!
Q: Why did you elect to pursue the acquisition of an existing veterinary practice as opposed to taking the start-up route and creating a new practice from scratch?
A: I knew that purchasing an existing practice meant I was purchasing an established clientele base, demand, and staff. While I do believe that I could have grown a de-novo practice pretty quickly (assuming I selected the right location), being able to come into a functional practice, fully staffed with operating procedures mitigated a little bit of the risk and stress in my mind. Also, for what it’s worth, the costs associated with starting and building out a new practice did not seem terribly cheaper than purchasing an existing clinic.
Q: Once you had decided that you were going to acquire an existing practice, what characteristics were you looking for in a practice to potentially purchase? What made you choose the practice you ultimately did purchase?
A: Potential for further growth and location were key. I figured out pretty quickly that a lot of pet owners in the area didn’t even know the clinic existed. I also discovered that some pet owners had tried calling to schedule appointments at the clinic and were turned away due to scheduling limitations. That told me demand already existed and that there was room for even more growth. I was confident that I could expand the business pretty quickly once I purchased the practice.
Q: Once you had identified the practice you were going to purchase, was there anything about the transaction process that you found to be surprising or unexpected?
A: It takes quite a bit of time to purchase a practice. The process can be pretty complicated and there are more moving parts than you would expect at the outset. Coming to an agreement with the current owner that you will purchase their practice for a certain price is only the first of many steps. Expect to commit a lot of time, energy, and focus – my transaction took a couple of months.
Q: What aspect of the transaction process did you find most difficult or challenging?
A: There are so many (seemingly) small details that need to be addressed along the way. No matter how prepared or informed you may feel, it seems inevitable that some unexpected topics or issues will pop up before its over. You also need to remain focused and informed throughout. Specifically, the last week or so leading up to the closing can be quite demanding.
Q: Was there any aspect of the transaction process that you identified as being unique to the veterinary industry? Any issues that made you think “only in the veterinary field…”?
A: Definitely! The veterinary industry is so unique. One issue that was very important to the selling veterinarian was the treatment of pets that lived at the practice and called it home. The seller did not want to relocate the these pets, so we had to spend some time negotiating how they would be managed, fed, and treated after the closing. Ultimately, it wasn’t a major hurdle, but it was definitely unique to the veterinary space!
Q: Now that the transaction has closed and you are the owner of the veterinary practice, what have you found to be most challenging about transitioning into the practice ownership role?
A: Transitioning into the management of staff and clients has been both fun and challenging, and sometime very difficult. I’ve had associates approach me about wanting to buy into the practice, which is a conversation I wasn’t expecting to have this early into practice ownership. Luckily, the practice is doing great, and I have been able to substantially increase my staff’s compensation. I will say that we’ve experienced some growing pains associated with increasing patient visits – the connection between increasing revenue and increasing staff pay can be lost on some, which is an issue I did not anticipate having. It really boils down to learning how to be a better business owner, and it has been very rewarding so far.
Q: If a prospective first-time practice buyer asked you for advice on how best to approach the acquisition process, what advice would you offer them?
A: Identify the best opportunity for you and go with it. Once you’re in the market for buying a practice, one hundred salespeople will approach you trying to be your friend and sell you on one hundred different things – understand what is best for you and what is important to you and stick with it. Also, be proactive and try to get all of your “ducks in a row” before the transaction ramps up. Surround yourself with reputable advisors before the process even starts – great lawyers and accounts are a must! If you’re on the floor working as an associate, it will be difficult to juggle everything. For most, this is a once in a lifetime experience, so while it is easy to consider yourself “just a veterinarian,” be ready to put your business hat on and enjoy the process! And be sure to lean on your lawyers and accountants along the way.