The decisions you make now will impact you and your income today and in the future. We are here to assist you to make the best decisions for you and your family.

Gather your team of trusted advisors.

• Start with your Transition Advisor and they can recommend veterinary-specific banks, attorneys, and CPAs to guide you every step of the way. We’ve done this many, many times and want to share our experience.
• We understand money is a concern, but decisions you make now can equate to thousands of dollars that you may never recoup over your career, so gathering your team of trusted advisors is priceless.

Your Transition Advisor can help you:

• Understand the practice and the purchasing process.
• Assist you to do a chart audit and other due diligence to determine the cashflow and if it is the right practice for you.
• Work with your other advisors to set up the best entity for your practice, acquire solid financing, and ensure all necessary documents and contracts are in place.
• Make a plan to retain clients and team and implement processes and procedures to help you to increase production and collection, as well as reduce stress.

We can help you with the process of buying a veterinary practice. Contact us today!

By Corey Young, MBA, CEPA, CVA, ABI

​Congratulations, you just accepted an offer on your practice! With all the emotions associated with the transition, when to notify your staff is surely at the top of your “to-do” list.  Telling employees that you are selling your practice is an extremely delicate process. Breaking the news too early can come with many risks, so best to wait until all final closing documents are signed by both parties and no more than one week before the new owner takes over. 
So, what are some potential risks? 
One of the primary risks is that employees will naturally be worried about their job security the moment you make your announcement. Oftentimes if they have too much of an advanced notice they may start searching for other opportunities. Staff leaving could negatively impact the transition and patient experience because of how instrumental they can be in helping the buyer and the patients adjust to new ownership. 
The other major risk is that nothing is final until its final. Veterinary practice sales are extremely complex and can be delayed for a multitude of reasons or fall through completely. Making the announcement before the sale is complete will cause stress and heartache amongst your staff during a time that you will be preoccupied with navigating a significant professional milestone. If the staff were to find out before closing was final, you wouldn’t be able to offer any reassuring answers because of unforeseen changes to the closing timeline.
Finally, regardless of your views of your staff’s maturity level, gossip will ensue. I have seen it countless times where a veterinarian tries to provide honest reasons on why they are selling, only to have their words misconstrued. Comments such as, “I’m selling my practice to focus on my health” can quickly morph into, “S/he is selling because the practice is going under,” or lead to unfounded conclusions such as, “After the new guy starts, we will all be replaced.” This kind of fear and uncertainty will have a profound impact on staff morale during a time where they will be needed to ensure a great patient experience during the transition process.
In the end, you probably have a deep and meaningful relationship with your staff. They deserve to know about ownership changes as they will be impacted, but it is best for them (and for you) that they be kept out of the loop until you have concrete answers to provide them. 

​By Corey Young, DDS, MBA, ABI and Jen Bennett, OMNI Practice Group
 
Congratulations! You just achieved a major professional milestone in completing the purchase of your new practice.
There are many tasks that will require your immediate attention after closing, but one often overlooked item that is crucial to your transition is ensuring you retain the staff. 
Here are some helpful tips for you to consider:
The first thing you will want to do is a formal “meet and greet.” I highly recommend that you meet your new employees within two days of the seller notifying the staff. This will help ease their anxiety about who the new boss is and give you an opportunity to personally remind them that they are an asset to the practice. It is also always a nice touch to schedule the introduction during lunch hour and as a kind gesture, to bring lunch for all. Be sure to check with the seller on any dietary restrictions, food allergies, and favorite restaurants.
Next, your new staff will be worried that you will be making changes that may negatively impact their lives such as pay, benefits, work hours, scheduled time off, etc. Make it a top priority to understand their concerns and to assure them that you will carefully evaluate all potential changes before making any decisions. While things might not be run exactly how you want them to be, be sure to weigh the consequences of losing a key staff member because of a decision you might make. Sometimes it is better to leave things intact while you get yourself established with the staff and with your new patients before you implement your desired changes.
Finally, you will be busy but find time to make a personal connection. Set aside one-on-one time with each staff member, get to know them, what they care about, and why they got into veterinary practice. Establishing a relationship early on will pay dividends down the road as your new patients will certainly be asking their trusted veterinary technician, assistant, or office staff member, “What do you think about the new guy/gal?” The goal is to not only retain your staff but to retain patients as well. Having staff in your corner is critical to your long-term success.

By Corey Young, DDS, MBA, AVI

I know. Running a business seems daunting. You just want to be a doctor and not have to worry about the rest. I understand. That said, it is wise to consider what is left on the table by being a career employee, or by waiting for that perfect practice to show up.
​
Let us consider a fictitious practice:

• Overhead: 60%
• Gross: $550,000
• Net: $220,000
• Acquisition price today, due to COVID environment: $300,000
• Interest rate: 4%
• Loan of $330,000 (acquisition price plus one month of working capital) over ten years: $3,341 monthly payment/$40,000 annually/$400,930 over life of loan

Let us assume 10% growth in the first two years and 5% growth in the next eight, all while maintaining overhead percentages.

• Total income over those ten years $2,600,000
• Estimate of practice value in ten years $700,000   

Sum of income and asset value $3,300,000
As an associate, how does this compare your compensation package over the next decade?   

By Corey Young, DDS, MBA, ABI

Are you ready to transition?
Is your practice ready to transition?
What is the market like?

These are all key questions to ask yourself. When is a good time to start thinking about all of this? The real answer is as soon as you buy or start your practice, but the more practical answer is dependent on you. If there any chance you will want to transition in the next five years, you should start working on your transition today.

Personal readiness and practice readiness are both more important than current market conditions; however, considering the COVID crisis, I am going to focus on market timing.

If any of the following sounds even slightly familiar, raise your hand:
I was ready personally, and my practice was ready in August 2019. I choose to wait because (pick one or more):

• I have a kid with one year left in college
• I have one year until I can draw Medicare
• There is one more room in the house I would like to finish
• My spouse retires in a year
• I pay off my house in a year
• I turn (insert round number like 60 or 70) next year and I would like to wait until then
• Etc.…

Now, for those of you that raised your hand, consider the reality of August 2020. How does that August 2019 decision to wait look? Questionable at best.

My intent is not to beat up on those of you that this struck a chord. Rather, I want to emphasize the need for starting early and getting help.
​
Transitioning is a difficult process. Do not go it alone. Contact an experienced, qualified transition specialist and get the ball rolling. We are here to help.

How many years you should have under your belt before you own a practice?  Typically, the number is five years, but that the number really depends on the doctor.  We’ve had doctors who were able to purchase a practice after three years and do quite well.   A lot depends on your comfort level, skill set and experience. 

Here are some things to consider before you buy:

1. Are you comfortable with your clinical skills?   If you have been out of veterinary school 3 to 5 years, you should have a feel for where you are with your skills.  A lot depends on the clinic(s) or hospital(s) you’ve been working.  Some may limit what you’re doing and others just may not be busy.  If you’re in a location that’s given you a variety and volume of experience, you should be getting a good amount of experience.
2. Have you seen a good practice in operation?  Sure, you’ve been working in one or more clinics, but are they well run?  Or, if they’re not, you know the difference.  If you are in a well-run practice, you should be observing how the doctor and/or office manager treat the staff.  Whether a veterinary assistant, office manager, or veterinary technician, they should all be treated well.  How about the patients and clients?   They should be given good, Nordstrom-like treatment.  They pay your rent and you want them coming back.
3. Do you know how to read financial statements?  Most veterinarians in the early stages of their career don’t know what a financial statement is let alone how to read one.  There are on-line courses such as accounting for non-accountants and other courses on financial statements and bookkeeping that can fairly quickly teach you what the financial statements are and how to read them.  Understanding them is imperative in running any business.
4. Now that you know how to read a financial statement, do you know what the numbers should be?  What percentage of collections should your payroll numbers be?  What about rent?  Etc., If you don’t know, there are resources you can look at on-line where you can learn.  Watch all of the White-Board Wednesday videos from Joel Parker, DVM that are on line.  They are great in teaching you numbers as well as other aspects.
5. Practice Management – Learn as much as you can with the free stuff on-line.  From the White-Board Wednesday videos to other on-line courses, you can learn a lot for no cost to minimal cost.  This will quickly help you grasp the key concepts of managing a practice.

These are just a few things you can do to prepare you to own a practice.  Keep in mind that practice owners typically make 20% to 25% more than an associate veterinarian.  In addition, the equity you build in a practice is a great source of retirement.

If you'd like to talk to us about your individual situation, contact us and we can help!

​Veterinarians typically sell their practice when a life event happens.  That life event may be health related, financial reason, or you have just reached the age where it’s time to retire and spend some quality time enjoying your family and life.  Whatever the reason may be there are several things you can work on that will make your practice more appealing and will help you and your family prepare for a practice sale.  Here are a few items to focus on:

Freshen up your practice – Buyers like to see a fresh, clean and somewhat updated practice.  That does not mean you need to do a complete remodel and spend a $100,000.  It does mean you need to take a look at your flooring and your walls.  If you have large holes in your wall or your flooring was leftover linoleum from World War II, you should fix the holes and put in new flooring.  Talk to your landlord, sometimes they will help with the cost.  If you have equipment that is held together by the “fix everything” duct tape, contact your local equipment rep and have it fixed.

Update your technology – We run into an occasional practice owner that considers indoor plumbing as new technology.  If you are in that category, or if you have not done any technology updates since Richard Nixon was president, you should look into digital x-rays and other technology that will not only appeal to buyers but will help you increase your production in the practice.  Contact your equipment rep for the latest and great technology.

Financial Review – Have a meeting with your financial planner or advisor to see where you currently stand with your retirement portfolio.  This will help determine how soon you can possibly retire, how much more you may need to put away to retire and/or how much you need to get out of your practice sale in order to retire. 

Practice Valuation – You should get a valuation done on your practice.  This will help your financial planner and you see where you stand with your entire portfolio.  Some doctors rely heavily on their practice sale to be a piece of their retirement nest-egg, so if you don’t know what your practice may be worth, you don’t know what size of nest-egg you have.  Call Omni for a free snapshot valuation. 

Clean up your books – If you have been aggressive in running expenses and other items through payroll, you should work on making sure the books are clean.   If you have multiple practices but run all of your income and expenses through one tax id number, you should ensure you can separate the income and expenses of both practices.   Meet with your CPA to analyze your numbers and see if you are in line with industry averages.

Grow your practice – One of the worst things you can do is take your foot off of the gas pedal.  If you want to maximize the value of your practice, keep production at least level with prior years.  A growing practice sells quicker and easier than a dying practice.   If you don’t know how to grow your practice and make it more sellable, contact a consultant, or have a practice assessment done.

These are just a few items that you can do to help prepare your practice for a sale.  If you work on these items now and over the next 3 years, you will maximize your practice value, enlarge your pool of potential buyers and be able to sell your practice quicker.  For a free consultation or an expanded list of things to work on, give us a call at 877-866-6053.

By Rod Johnston, MBA, CMA
OMNI Practice Group

A lot of “experts” have been giving their own predictions on the Covid-19 Pandemic.  The truth of the matter is, no one has a crystal ball and knows what tomorrow will bring.  So far, most experts have been off on their predictions.  What we do know is that there will be a “post-Covid” and life will get back to some form of normal in the relatively near future.  

We as a society have historically been through pandemics such as the Spanish Flu, HIV/Aids, Hong Kong Flu, and others.  Pandemics are definitely game changers and force us to look at how we live, work, educate, etc., This pandemic will be no different.  Some states are beginning to open up as I write this article.  Some veterinary clinics and hospitals have already made some changes.  Dropping off animals outside the office, taking patients directly into exam rooms, using telemedicine, etc. are just a few examples of changes made in some practices.  Some of those changes will be short lived but some will be permanent.  But the truth is there will be changes.

One thing that I promise you will not change is that animals will continue to exist and people will still have pets.  I’m 100% certain of that.  As such, animals will continue to need care.  Unless plumbers start doing veterinary work, that means they will need to see a veterinarian in a veterinary hospital!  It will just be a matter of how the new game of veterinary practice will play out with new rules in place.  In sports, rules change all the time.  Players and coaches just adapt to those rules and adjust to playing under those new rules.

Another rule that may change is valuations on practices in the near term.  I have heard a gamut of theories from brokers, bankers, veterinarians and the grocery store clerk.  But they are just that... theories.  My advice would be to stop listening to your friends, relatives and others who don’t have any more knowledge than you do about the future of practice valuation.  Here’s what I know for sure, good practices with good margins pre-Covid will be good practices with good margins post-Covid.  They will sell for a normal value, even post-Covid.  I also know patients will come back to the veterinary hospitals.  This will be true for most all offices.  I’ve spoken to several veterinarians who have told me they have full schedules already in the immediate future.  For those practices that are below average to average practices, there may be some adjustments to values in the near term.  Banks have told us that they may adjust their valuations as well.  I don’t expect huge discounts, but perhaps a discount to account for some of the new expenses or reduction in production. 

 As a potential buyer of a veterinary practice, you should look at the practice as if it was pre-Covid.  In the long-run, that practice will get back to “normal”.  If you find a practice that has been what you’re looking for, you need to do your due diligence and be confident that normal will happen again.  Those who do will be ahead of the game. ​

by Steve Kikikis, OMNI Practice Group

In Washington State, Governor Jay Inslee has halted all non-emergency services and elective procedures for the next 8 weeks forcing most medical offices to close during this time (hospitals, surgery centers, dental offices, etc.)

Rent is still due!
The obligation to make a rent payment is not automatically stopped because your business has been forced to close! Here are some ideas of what you can try:

Talk to your Landlord.
Engage with your landlord right away. It may be news to them that your office has been forced to close, leaving you with little to no ability to produce revenue. They might in a situation to help, though this is a negotiation not a guarantee. Ask your landlord if they would be willing to waive or reduce your rent, a 90-day deferral of rent could be option, or just pay the CAM/NNN – anything can help. Offer to make it up over time once the doors are back open and you’re treating patients. Remember the landlord may be having their own financial hardships, but they do have an interest in you being able to pay the rent for years to come.

Check-in with your Insurance Agent.
Some insurance policies have coverage for unique circumstances in the case that you are not able to run your business. This may help with covering rents and loss of wages.

Legally...
I am not an attorney, nor is this an attempt to provide legal advice. So, check-in and consult your attorney, make sure they specialize in Commercial Real Estate Law with a focus on Medical leases and contracts. On rare occasions, your lease may include Force Majeure, which could offer relief in unforeseeable circumstances that prevent someone from fulfilling a contract, but this is unlikely. After a quick review of a traditional WA State Commercial Brokers Association Lease, there was no Force Majeure clause within the document.
Ask your attorney about Common Law which is prevalent in many states. This may address the impossibility to perform and make an income, it doesn’t automatically relieve you from your rent obligation, but the fact that you are forced to perform only emergency procedures in WA State may allow for an avenue for relief.

Loan…
Banks across the nation are offering short term Small Business Loans at low rates as a method for giving small businesses financial aid. First, check-in with specific banks that focus on loans for Medical providers. Small Business Loans are available now. Some larger national banks may offer other loan programs or allow for deferred payments for the time being. Now may also be a good time to refinance your practice loan into a lower rate loan and saving you money.

If you need help getting in touch with a qualified attorney, banker, want to talk about your specific circumstances and ideas, or just want to tell me I am wrong, please contact me at [email protected].

Connect with Steve on LinkedIn: https://www.linkedin.com/in/steve-kikikis-378b8697/

By Corey Young, DDS, MBA, CVA

What a crazy time we are in. At least to me, this is a sober reminder that major disruptors are almost impossible to predict. I am reassured that our nation seems to be taking the situation seriously and I do firmly believe we can weather this storm. Most of you reading this are making difficult decisions about staffing, how to deal with emergencies, and how you are going to pay the rent for the next few months. I don’t envy any of you right now. There is a strong support system in this industry ready to help. Don’t hesitate to reach out. I think you will find all of us willing to go the extra mile right now to help you keep the ship afloat.

Many of you reading this are very close to transitioning your practice, some of you being on the fence. It is human nature to want to put off transitioning until after this crisis is over. You may even be getting that advice from your CPA or financial adviser. I am going to give you three reasons why you should do exactly the opposite.

One, value. We have been in a booming economy. Many of your numbers have been at all time highs over the last couple of years. Now COVID-19 hits. How long will we be shut down? How will the economy look on the other side? Will the clients pull way back on elective treatments for a couple of years like they have done in other recessions? In the present, buyers and bankers will mostly be willing to look past these next couple of months as an anomaly. Practice values will hold. For a while. That said, as someone who does Valuations and sells practices, I can assure you that in two years no one will care what your 2018 and 2019 numbers look like. In two years, what happens in 2020 and 2021 will be the new reality.

Two, market. There is a backlog of practices that are nearing the market. The people who work the transition market have been wondering when that bubble will burst for a few years now. I for one believe this crisis will do the job. Most doctors are going to ignore me and wait two, three, even five years, watch the market flood, the economy falls off its current pace, and wonder why their practices are down in value and are hard to sell. The early bird gets the worm.

Three, time. Many of your potential buyers had their hours cut, some by 100%. They have unprecedented time right now to look at practices. Odds are you also have more free time than normal. Realistically, practice sales won’t close until this crisis is over. That said, there are months of work between deciding to put a practice on the market and a practice changing hands. When life gives you lemons…