Today's Veterinary Business

OCT 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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Page 52 of 67

51 October/November 2018 • TODAYSVETERINARYBUSINESS.COM veterinarian, the failure to agree on employment terms can make a deal implode late in the process. • Address the seller's real estate, either the assignment of the lease or transfer of the facility. The seller should determine early on whether hurdles need to be cleared in assigning or transferring rights to the seller's facility. BUYERS SHOULD: • Set the seller's expectation for a downward adjustment in the purchase price if the buyer's due diligence uncov- ers negative information. • Seek to pay more of the pur- chase price over a period of years after the closing rather than at closing. • Request that part of the pur- chase price be held in escrow for a period after the closing. This ensures that money is available to cover any of the seller's liabilities that arise after the sale. • Require an exclusivity clause that prevents the seller from engaging in discussions with other potential buyers during the due diligence and nego- tiations. This helps avoid a bidding war that can drive up the purchase price. Negotiating the Sale Agreement Depending on its structuring, the sale agreement generally takes one of three forms: an asset purchase agreement, a stock sale agreement or a merger agreement. It reflects the final agreement of the parties and allows them to proceed to a closing, either when the agreement is signed or on a specified date. Although the sale agreement typically contains hundreds of important provisions, buyers and sellers often focus their negotia- tions on key areas. SELLERS SHOULD: • Seek to limit the seller's rep- resentations and warranties. Representations and war- ranties become the basis for the buyer's indemnification claims, which chip away at the purchase price after closing. • Try to cap the total damag- es the seller could pay due to misrepresentations and warranties. • Negotiate a relatively short survival period for the repre- sentations and warranties so that the seller isn't exposed for an unreasonably long time after the closing. • Avoid or limit the owner's personal liability for represen- tation and warranty claims. BUYERS SHOULD: • Require a holdback or an escrow of part of the purchase price to help cover indemnifi- cation claims against the seller. • Negotiate a relatively long period for the seller's repre- sentations and warranties. • Provide employment terms aimed at the retention of key employees. • As long as state law allows it, consider requiring a broad and long non-compete agreement for any sell- ers who will not continue practicing as well as for any employees who enter into employment agreements. • Be clear about whether and to what extent the seller will assist the buyer in the transi- tion and integration process after the closing. Of course, even the best negotiators will not succeed if the other party is not a good match. Don't base your choice only on the proposed purchase price. Also consider the culture and vision for the combined practices after the closing occurs. Legal Lingo columnist Nicole Snyder is a partner at Holland and Hart, where she advises clients on mergers, acquisitions and complex employment matters. She is a member of the American Veterinary Medical Law Association. Continued from Page 49 Dr. Wendy Hauser is president and founder of Peak Veterinary Consulting. She represents the American Animal Hospital Association in the American Veterinary Medical Association House of Delegates. Dr. Joy Fuhrman is director of finance and operations at Shepherd Software Inc. • Appropriate delegation of tasks to maximize the skill levels of all team members. Community • Active representation of the hospital in civic groups, such as Kiwanis, Rotary or Toastmasters clubs and the Chamber of Commerce. • Involvement in youth activi- ties such as visiting schools to discuss animal care and dog bite prevention, and educat- ing 4-H and FFA clubs about veterinary medicine. • Presenting client-education nights on topics of interest to pet owners, such as first aid, dental care, nutrition or preventive care. • Involvement in veterinary medicine leadership such as Power of Ten programs or local, state or national veteri- nary medical associations. Business Skills • Development of financial acumen, such as understand- ing key performance indica- tors (KPIs), profit centers, profit and loss statements, budget- ing, pricing and discounts. • Internal marketing, such as the development of policies to ensure the consistent delivery of patient care. • External marketing, such as authoring social media or website client-education content. • Developing implementation plans for new services, such as wellness plans, pet health insurance and new medical offerings. Professional Development • Growing medical compe- tencies in dentistry, behav- ior, nutrition or surgery, for example. 2 3 4 5 • Learning enhanced communi- cation skills through advanced training, such as a FRANK communication course. • Advanced training to en- hance leadership skills within the hospital and the veteri- nary profession. Team Development • Presenting a synopsis to the team of what was learned at a CE conference. • Preparing and facilitating team education training sessions on topics such as anesthesia, CPR and dental radiology. • Teaching and modeling client conflict-resolution skills to the entire veterinary team. • Mentoring a new veterinarian. Our Conclusion Today's production-based compen- sation can create negative behaviors such as financially motivated case competition, a lack of professional collaboration, team divisiveness and stress. A viable alternative is to compensate associates with a living salary and a co-created hospital per- formance and merit-based bonus plan. Outcomes include personal growth and professional develop- ment of individual veterinarians. When employed veterinarians are encouraged to actively par- ticipate in crafting the hospital's success, everyone benefits.

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