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Whos going to buy our equine practices?
Im worried that todays corporate consolidators arent an answer for solo practices who cant find associates to buy them.
As the retiring generation of equine veterinarians gets closer to aging out of the industry, what options do they have? (Yakov/stock.adobe.com)With increasing frequency, small animal veterinary practice owners are being offered the golden (corporate) ticket to exit their careers gracefully, financially secure and with the knowledge that the hospitals they worked so hard to build will live on beyond their retirement. The major national players have been joined by more and more smaller, regional and sometimes family-owned entities, carving out groups that often include no outward changes in the practice at all.
So, what about mixed animal or equine practice? The same trend is most certainly not occurring in those areas, and there are some likely reasons why.
1. Small animal practices tend to be facilities with doctors attached, but equine practices tend to be doctors with facilities attached
Although there are no doubt exceptions, a large number of equine practices are centered around the owner or primary veterinarian and his or her vision. More often than not, they started as solo practices, grew to the point that they had about 150% of the workload they could manage and hired a single veterinary associate. Also, more often than not, the name of the associate changed every 12 to 18 months.
Equine or mixed-animal practice isn't for everyone. The inherent danger of practice, the long hours, the after hours/emergency work and the inability to generate the same salary as a small animal veterinarian tend to cure a lot of young doctors of their interest in equine work. Associates who stick around succeed in growing clientele, but along with that comes the dream of going it alone and starting their own solo practices. It's a sad reality, but the fact is that many equine practices have nothing to market to a corporation. Their single greatest resource-for some, their only resource-will ride off into the sunset upon retirement.
As I mentioned, there are exceptions, and many large equine practices may be attractive to buyers, but where I'm from, I can count on one hand the number of regional equine practices recognized by their business name. All of the rest are known as “Dr. He's-the-best or “Dr. She's-amazing.” If that's client perception and then those doctors retire, what's left?
2. Many equine practices were never big enough to need outside support to manage daily headaches
With zero to two employees, the need for intensive HR oversight, complicated payroll and intentional financial controls was never needed by many equine practices in the way it was for a small animal practice with 20 to 25 employees. As small animal practices grow and become more complicated to manage, the possibility of a corporate structure that promotes centralized support starts to be attractive. At the same time they land on the radar of corporate acquisition, practice owners themselves are often screaming for the help a corporate entity can provide. That just isn't the case for the average equine practitioner: They're heavy on service, light on product sales and work directly every day with their employees, which creates a stronger bond and minimizes retention problems. In short, while there was often no compelling reason for a corporate entity to come calling on equine practice, the practices themselves weren't even asking for those visits.
As the retiring generation of equine veterinarians gets closer to aging out of the industry (in my area there are four veterinarians that have 200 years of cumulative experience among them), what options do they have? I asked number of corporate entities and only received responses from a few.
Lakefield Veterinary Group, a family-owned organization with hospitals in seven states declined to address the specific question relating to interest in equine practices, but Craig Coughlin, their EVP of business development, did provide the following statement: “At Lakefield we are actively seeking to add to our family of high-quality veterinary hospitals with like-minded veterinarians in a variety of regional markets across the United States who are interested in seeing their hospital's legacy continue forward for the next several generations to come.”
While the statement is a bit ambiguous on the specific topic, it does allow for the possibility that Lakefield could have interest.
I did find one hospital group that is openly equine focused (among other things). MAVANA (Mixed Animal Veterinary Associates North America) operates a national network of equine, mixed animal and companion animal practices. Started in 2016, the group was originally focused on the conglomeration of several “founding” practices looking for a way to leverage support-related issues that all practices face. They weren't necessarily expecting the dozens of other practices that expressed interest following the company's creation but quickly identified that expanding their vision could fill a hole in the industry. They operate 35 practices in 15 states and employ nearly 200 veterinarians, of which about 125 are equine doctors.
According to MAVANA president and CEO Scott Spaulding, DVM, equine and mixed practices were overlooked at first by almost everyone. The MAVANA team believed there was a fundamental problem with the way practices were valued and the manner in which shares were sold to associates, often making such a transaction unprofitable for the selling party. So, instead of offering young associates a pathway to owning a specific practice, which may never be affordable for them, MAVANA offers small blocks of shares in the company as a whole. A significant number of veterinarian shareholders had never owned any part of a practice, but they could invest in their own future through this avenue.
Dr. Spaulding described his organization's structure that allows for the tailoring of an acquisition package to a specific situation, which has allowed for some unique partnerships. When probed about limitations to MAVANA's focus, Dr. Spaulding did say that their rule of thumb is that an acquisition should fall in the $1.5 million or more category in terms of annual revenue. That number would exclude a great deal of practitioners looking for a pathway to retirement.
The best path appears to be looking for an associate who meshes well with the style of the practice, who can inspire trust in the clients and who wants to continue building the practice long after the original owner is gone. In the coming years, however, look for corporate entities in our industry to identify an avenue for them to become profitable by spreading their interests into equine and mixed animal practice. So much has happened in just 10 years in terms of the evolution of corporate acquisition, and I very much doubt that evolution is over.
Long-time dvm360 magazine and Firstline contributor Kyle Palmer, CVT, is hospital manager for VCA Salem in Salem, Oregon, as well as a practice management consultant for a number of other hospitals.