Today's Veterinary Business

AUG 2018

Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.

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17 August/September 2018 • TODAYSVETERINARYBUSINESS.COM Jersey. They sold the practice to a corporation but maintain the real estate. Jerry Harris, DVM Dr. Harris and his wife, Lynne E. Johnson-Harris, LVT, RVT, sold Hinckley Animal Hospital, a full-service clinic located in north- east Ohio. The practice assets and the real estate were sold in two separate transactions. The buyer had been out of school about 10 years and was an associate veter- inarian at a practice a few hours away. She and her husband now run the practice. The first-time practice owner worked on the fi- nancing with a bank and the Small Business Administration. Laurel Kaddatz, DVM Dr. Kaddatz sold Pound Ridge Veterinary Center in Westchester County, New York. Pound Ridge serves dogs, cats and small mam- mals such as hamsters, guinea pigs and ferrets . He partnered with a hospital management company whose business model is based on having the veterinarian serve as a partner co-owner to handle the medical aspects of the practice while the company oversees the management aspects. Dr. Kaddatz is now the medical director. Here's what they had to say: How did you know it was time to sell? Dr. Friedman: As time went on, the nonclinical duties became in- creasingly overwhelming, daunting, time-consuming and of diminishing interest to me. It was the best deci- sion I ever made. No regrets. Dr. Gjivoje: After 23 years at my current job, I couldn't imagine myself doing the same thing for an- other 20 years, though it's been a terrific run. I am tired of New Jersey winters and potholes. I want to give my kids an opportunity to experi- ence life in another beautiful part of this country, where a drive to the beach will be 10 to 15 minutes instead of an hour and a half on a good day. Dr. Harris: I practiced veterinary medicine for more than 40 years. I felt it was time to start relaxing. Dr. Kaddatz: I always said I would work until I was 68. I'm getting pretty close. Although I don't have burnout, I could feel that it's time to decelerate. How did you prepare to put your practice up for sale? Dr. Friedman: I was not ap- proached by a buyer at first, but after a few years enough people knew I was looking, so the appro- priate connections could be made. When it was time to think about selling, I had the company that had been doing most of my accounting do a valuation for me. It turned out the same company had another client who was interest- ed in the purchase. Dr. Gjivoje: Physically, we polished it to make it glow inside and out. From a practice perfor- mance standpoint, we purposely chose to sell at a time when we were at peak performance to be able to commission the highest price. Jerry Seinfeld was our model; we wanted to go out while on top. Dr. Harris: Several years before the sale, my wife and I met with a broker who specializes in the pur- chase and sale of practices. We used his suggestions to fine-tune the operations of the practice. During that process we received numerous communications from various cor- porate entities showing interest in purchasing our practice. After many meetings with several corporate groups it became apparent that our wants and needs did not match theirs. We reconnected with the broker and started the process. Dr. Kaddatz: I didn't do anything special to prepare for the sale. We updated our end-of-year financial statements to calculate EBIDTA [earnings before interest, taxes, de- preciation and amortization]. Word of mouth resulted in three corporate entities approaching us, as well as a private practitioner. My associates were not interested in a full sale because they all work part time and realized that you can't effectively manage a practice work- ing two days a week. How did you think the sales process would work? Dr. Friedman: I thought it would be much easier and faster. Other than that, I didn't have many expectations as I knew only a few other people who had gone through it. Those people were extremely helpful to me in terms of understanding the timeline and sequence. I went through four po- tential buyers and learned a lot on that first pass, which lasted about a year before I decided it was not the right situation for me. After that, I had a clearer, more realistic vision of my desired path. Dr. Gjivoje: Since this was our first sale, we had no expectations. We hoped it would be smooth and seamless, which, of course, it wasn't. It was a roller coaster ride. The bro- ker experience was terribly disap- pointing. We did most of the work and the prospective private buyers were not really what we sought. Dr. Harris: We expected a smooth and acceptable change of owner- ship. For the most part, it happened. Dr. Kaddatz: Lacking prior experi- ence, I had no expectations, although I had a timeline I thought would be appropriate. The outcome ended up about where I thought it would. How did you determine the value of the practice? Dr. Friedman: I hired a business consultancy, which determined the value for me and helped me set the price. There was a lot of back and forth with the first potential buyer that we were unable to resolve. With the final buyer, it was not an issue. Everything just fell into place, work- ing out beautifully for both parties. Dr. Laurel Kaddatz stayed on as medical director after the sale of his New York hospital. Dr. Jerry Harris established his Ohio practice in 1979. Dr. Deborah Friedman sold her two California practices to another veterinary ophthalmologist. "I went through four potential buyers and learned a lot on that first pass, which lasted about a year before I decided it was not the right situation for me." — Dr. Deborah Friedman

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