#13 - The Veterinarian's Guide to Buying and Selling Practices

Unlock the potential of veterinary practice ownership with expert insights from Kelly Jackson of DVM Match, straight from the bustling atmosphere of the Western Vet Conference in Las Vegas! Our latest Veterinary Blueprint Podcast episode is a treasure trove for any veterinarian daring to dream of owning their practice.  We dissect Kelly's journey from finance to the niche of working at veterinary practice brokerage. With Kelly's guidance, discover how DVM Match's unique approach of third-party business appraisals can lead to fair practice valuations, setting you up for success whether you're buying or selling.

This episode is a candid roadmap through the landscape of veterinary business transitions. We tackle the nitty-gritty of preparing to buy or sell a practice, including the importance of starting the journey years in advance and the strategic tweaks necessary to polish your practice's financial appeal. Whether you're an associate looking to make the leap to ownership or a seasoned owner contemplating the next phase, our conversation lays out the pivotal strategies and professional insights to navigate the complex market dynamics of the veterinary industry. Join us for an enlightening session that could very well be the catalyst for your next big career move.

Guest Information:
Kelly Jackson
206-491-2357
kjackson@dvmmatch.com
https://dvmmatch.com/
DVM Match Mountain West

Host Information

Bill Buter – Contact Information

Direct – 952-208-7220

https://butlervetinsurance.com/

bill@butlervetinsurance.com

https://www.linkedin.com/in/billbutler-cic/

Schedule a Strategy Session with Bill – Strategy Session

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Transcript

Speaker 1: 0:07

Welcome to the Veterinary Blueprint Podcast brought to you by Butler Vet Insurance. Hosted by Bill Butler, the Veterinary Blueprint Podcast is for veterinarians and practice managers who are looking to learn about working on their practice instead of in their practice. Each episode we will bring you successful, proven blueprints from others, both inside and outside the veterinary industry. Welcome to today's episode.

Speaker 2: 0:32

Welcome to the Veterinary Blueprints Podcast. I am your host, bill Butler, with Butler Vet Insurance, and just so excited to be bringing another episode of the Veterinary Blueprints Podcast where animal health meets entrepreneurship and business acumen. And, as you can tell in the background, I am on location. I am coming to you live from Las Vegas at the Western Vet Conference I think they call it Victus something or other now. So, anyway, I'm just coming to you from Las Vegas and I am just I couldn't be happier to be joined today by Kelly Jackson with DVM Match. Welcome, kelly.

Speaker 3: 1:08

Hey, how's it going bud?

Speaker 2: 1:09

It is going awesome Now. You and I met at a VMX just a couple months ago a month or so ago and I was just I was intrigued by what you do and how you do it at DVM Match, and so I was excited to have you on the podcast. We connected on a phone call and you do some great stuff, so why don't you tell us a little bit about yourself, how you came to work at DVM Match and what DVM Match is?

Speaker 3: 1:35

Oh, so the crazy thing is that I started off in the finance business in the early 2000s and that was a credit card bank by the name of MBNA, and so MBNA wanted to diversify in the early 2000s and they bought this company called Scott Financial. So Scott Financial was the first company that really offered loans to dentists and the medical professionals.

Speaker 2: 1:59

All right.

Speaker 3: 2:00

And then from there we were bought by B of A. That company became B of A Practice Solutions, who's the largest lender right now in the health care space. I managed the Midwest region forum for about eight years and did a couple other things in the veterinary health care space. And then I got the opportunity to become a partner over here at DVM Match. Dvm Match, we're a brokerage, but the thing that makes us different from every other broker is that we use a third-party business appraisal.

Speaker 2: 2:30

Okay.

Speaker 3: 2:31

And the cool thing about that is that I don't do the valuation. It's done by Cat Zapper Miller, who's an accounting firm based in Indianapolis. They're leading in the space, so that way, when you get a valuation from us, there's no dog in a fight for me. Typical broker.

Speaker 2: 2:49

Numbers, the number.

Speaker 3: 2:50

Yep Numbers the number.

Speaker 2: 2:52

So, whatever the number comes back, that's how you're going to work with it, versus there's no incentive for you to try and monkey with the numbers or get the numbers where they need to be to try and help. It's like, hey, this is what the bean counters, the CPAs, this is what they came back with, that's what it's going to be Exactly. So then you can just really invest all your time and energy towards helping the veterinarian.

Speaker 3: 3:11

Either sell or buy that practice Correct, and the cool thing about us is that we'll work with anybody. We'll work with the doctor who has. It's just them the single doctor practice to if you have 30 doctors, but that's the one thing for us. We don't care about the size of your practice, because there's a stigma of, hey, if I don't have a practice, that's a practice that could be sold to corporate, I don't have any value in my practice yeah so you know the reason I want to get you on.

Speaker 2: 3:41

I think there's a lot of um, a lot of veterinarians out there who either own a practice and aren't sure what to do with it, because, you know, in my industry and the insurance industry there's a lot of the same sort of things happening. Right, you have a veterinarian who's been hanging around a long time or an insurance agent that hang around a long time. They kind of get to the end. They go well, now what do I do? Now, what do I do? And so who's a good candidate for somebody to work with a broker like DVM Match and say you know, I'm thinking about selling my practice or I'm thinking about buying a practice? And who would be a good candidate for you to reach out to and who do you like working with the most?

Speaker 3: 4:20

Well, if you're looking for when we speak about the buyers or the person person's going to buy a practice, I think the key is that that person is licensed two to three years at a minimum, because that way they've seen a lot of different things and then, once they get into the world of practice ownership, then there'll be less surprises for them. I don't think that it's operable for a person who comes right out of school or sixmonth license to go out there and buy a practice.

Speaker 2: 4:48

So that first-year associate saying, all right, I'm going to take the world by storm. Probably get a little experience as a veterinarian first before you get into the business side of things and really get underwater? Exactly, and that just helps them. I think you know from my own experience. I was just selling insurance for a whole number of years. I got into the insurance industry in 2004. I didn't take over as president of the insurance agency until 2017. Like, it just takes that long to understand the industry before you can say I'm going to own something. Correct, I agree with you. So three to five years I've been a veterinarian and I want to buy a practice. Where do I start? I'm going to reach out to a broker or I'm just going to start door knocking?

Speaker 3: 5:31

No, I think that's why we have a website, and the great thing with DVM Match is you can set up a profile. So when you set up a profile on the DVM Match website, it will allow you to find out about practices that are available where you want to be. So next thing, you know, you say I'm Bill, I'm in the Twin Cities, I'm looking for an opportunity in the Twin Cities. So then when there's an opportunity that pops up in the Twin Cities, you'll get a notification and then you'll be able to look at that opportunity.

Speaker 2: 6:01

So even if you're, let's say, we've got a really great vet school at the University of Minnesota, but you're from Kentucky, you go to vet school and you move back to Kentucky, but you really had a great time living in the Twin Cities, you say, hey, like you said, I'm going to set up a profile for maybe where I went to school or maybe where I'm from, or maybe my spouse is getting transferred to a new city and I want to travel with them, so you can set up that account with DVM Match and you'll help match them with opportunities in that specific location.

Speaker 2: 6:31

Correct, that's pretty cool. And so on the buy side, you'll help match an associate with an opportunity that fits what they're looking to do. On the sales side, what's a great opportunity? I think there's a lot of myths out there about you know only corporate wants to deal with certain size, or only you know only veterinarians like this and I think you and I were chatting right before we got on today, kelly, that there's opportunities out there veterinarians who don't think their practice is worth anything, but it really is.

Speaker 3: 7:08

Oh yeah, it's really awful because the example I used was speaking with a young lady who'd been in practice for 25 years. They did about $900,000 a year in gross revenue and then they were netting $300,000. But since she was a single operator in that practice, or single doctor practice, she's not an opportunity for a corporate to come in.

Speaker 2: 7:33

Yep. So the corporations. There's been a shift right. I think three to five years ago they were taking whatever was coming across the board. They were taking it in. And now, with interest rates being a little bit different and they're looking at the dynamics and the metrics for them it makes more sense to take on those five plus doctor practices. Those are really the economy of scale that work best for them. Because there's too much risk taken on a one doc practice, because if that doc leaves, because there's too much risk taken on a one-doc practice, because if that doc leaves, they got nothing Exactly. So for an associate saying, hey, I'm looking to go somewhere and you mentioned $300,000, and why don't you talk about the math of being an associate versus an owner a little bit? Because I think that for an associate out there who's like I'm not sure I want to own a practice, what's the math look like as an owner versus an associate?

Speaker 3: 8:24

working at a practice.

Speaker 3: 8:26

Oh, I think it's great, because the thing, the one big thing about going to veterinary school is that you're going to acquire a lot of debt a lot of student debt and in a lot of circumstances based upon, like we said, higher interest rates and total amount of debt that you would have when you go to vet school in the student loan world you have to pay that stuff off. So to pay that stuff off, if you, let's say, you're an associate and you make $150,000, but you still wanna have a house, you still wanna have a car, you still wanna go on vacation there's other things that you may wanna do, so Practice ownership can be that vehicle to where you turn. I was making $150,000 as an associate and now I'm making $300,000 as an owner, and that way it gives you the ability to create a better life for yourself and your family, because think that's the most important thing.

Speaker 2: 9:22

Yeah, and you know I relate to, you know kind of my own thing right. Like I'm an owner, I run the business, my name's on the wall, so there's more risk involved. But as the owner you also get the reward right and the payoff. And the thing when the veterinary community and we were speaking on another episode of the podcast here from West Vet with Tristan Geis from Bank of America and she was saying you know, the default rate with for veterinarians on loans is like astronomically low. Like if you're open and you're generally a good veterinarian, you're gonna make some money and it's gonna be a pretty good deal for you and if you own it you're gonna get more and if you're just an associate you're gonna get less exactly like I'm just a simple guy.

Speaker 2: 10:01

But correct me if I'm wrong, kelly. That's kind of how it it works.

Speaker 3: 10:04

Right and think when you call your vet today, there's a two-, maybe three-week wait, depending on your circumstance. Yeah, I think some of that slowing, like you talked to.

Speaker 2: 10:14

some veterinarians is slowing down, but there's still like there's a shortage of veterinarians, there's a shortage of appointments, and so you know, the math is different when you own the business, when you own the practice. So why don't you describe the process a little bit? I'm an associate, or let's start with the seller side. Let's start on the seller side. I want to sell the practice and what's the process? You describe the process for the buyer a little bit. You set up a separate profile. Hey, I'm interested in this market and I think we'll get into what happens next. But on the sales side, I'm a 67-year-old veterinarian. I'm like all right, I've had enough of this. I'm ready to retire to Arizona, because you're from Arizona, you're in the Arizona area.

Speaker 2: 10:57

I'm ready to get down to the Phoenix area and watch the Coyotes play hockey down the hockey fence. So I call you up and I say, hey, I'm ready to be done. So I call you up and I say hey, I'm ready to be done. What's next?

Speaker 3: 11:07

So what we do is we set up an initial conversation to find out what your dream transition looks like, because that's the most important thing is that, if you're going to sell something that you built, I think that you want to have it Blood sweat and tears too right. Definitely, I think there's something that you just wanted to work the right way. You may have a vision. Your vision may have you work one day a week. Your vision may say I'm handing the keys over.

Speaker 2: 11:36

Your vision may say one I'm done, or I want to stick around for a couple years and work part-time because I just love being a vet, but I don't want to own this anymore and deal with the management, exactly.

Speaker 3: 11:44

So first we figure out your vision, okay, and where't want to own this anymore and deal with the management Exactly. So first we figure out your vision and where you want to take everything and then, once we do that, we'll send you out a questionnaire. The questionnaire will give us a lot of information about your practice. We'll connect the financials that we would need for the valuation and then we'll send all that information to KSM, our accounting partner, and after about six to eight weeks, sometimes there's a back and forth with questions that we may have.

Speaker 2: 12:11

Hey, your financials weren't so hot, so we need a little bit more information. I bought an insurance agency that did not have a P&L, didn't have a balance sheet, didn't have any of that stuff, and so some of that stuff's a little different. And you know, it was a great agency. They just weren't hot on the financial stuff, and so some of that stuff's a little different. And it was a great agency. They just weren't hot on the financial stuff and I'm sure you've seen veterinarians, well-run business, but they didn't have anything to back up the numbers.

Speaker 2: 12:34

Correct so then you're trying to recreate some of that stuff, so that will slow things down a little bit. So if you're thinking about selling, you probably want to get a jumpstart on that and have three years of good numbers ahead of this right.

Speaker 3: 12:43

Yeah, three to five years. And then we'll ask for the corresponding P&Ls. We'll send that, we'll put that on our secure portal and then our accounting partner they'll put all the numbers together. Then we set up a call with you to give you the valuation. And then, once you look at the valuation and say, okay, this looks good, then we take the practice to market.

Speaker 2: 13:07

So hey, put the for sale sign in the front yard if you're a real estate agent, right so, houses for sale through some showings, and that's where I think you know you having kind of a pool of candidates ready to go, you're not waiting six months to find a buyer. You've got people who are already interested. And I know, you know d DVM match. You guys do a great job networking, um, you know, like a lot of the lenders do, a lot of the brokers do, but you guys do a great job networking with the different uh you know attorneys, cpas, bankers, so that way when you find the right candidate it helps speed the process up right, yes, so that's the thing we always talk about is building a team.

Speaker 1: 13:49

Yeah.

Speaker 3: 13:49

And building a team as far as having a banker, because you know there's lots of you know healthcare-specific bankers out there, healthcare-specific CPAs and attorneys and people who can help you through the transaction. So I would say everybody has a friend Yep. So I would say it's, it's, everybody has a friend yep. And so I have a friend that does that may do some line of legal work, but they may not understand what I need for this type of transaction.

Speaker 2: 14:14

Yep, don't go to that person yeah, go to the one who knows this kind of transaction right. Exactly. That's where working with a broker I think is is beneficial, because you know where some of the speed bumps are going to be for the roadblocks and help navigate that versus kind of stumbling through on your own. Yes, so take it to market. Boom and you find a buyer. Wham, you're off and running. So the practice is sold. Or you found a buyer, it's out to market. You got the number, you're going to sell this thing. You find a buyer. You work them all the way through the sale process as well.

Speaker 3: 14:50

Correct. So what we'll do from there is we'll each buyer or potential buyer of the practice.

Speaker 2: 14:56

So let's say you got three candidates who are you know? Hopefully you got some competition. You can pick the right candidate right, the best opportunity, based on what that veterinarian identified and what was important to them on that initial conversation.

Speaker 3: 16:09

Yes, and the funny thing is that sometimes you'll have people who will meet and then realize that it's not a really good vision match, regardless of if it's an opportunity they can take or not. So sometimes it takes more than one or two people to fill the place. But then once let's say, you decide, hey, this is the match Bill and Kelly are going to do the deal.

Speaker 3: 16:31

We're going to do the deal, then from there we would get you in touch with a finance company that would finance the transaction for you, so that way you could get your money immediately, opposed to holding debt. And then we work you through the contract phase with your attorney, and then it's delivered.

Speaker 2: 16:54

Delivered. So on the buy side, let's say I'm a buyer, so basically we walk from someone, start to finish. Hey, on the sell side, we're going to do the initial questionnaire, get the valuation, sell the practice. On the buy side, I put my name in the hat, I got my profile set up and all of a sudden practice pops up in the Twin Cities. You say, hey, this is great, looks good for me. Kelly, let's get to work on this. What does that look like on the buy side?

Speaker 3: 17:23

Well as the buyer.

Speaker 3: 17:24

What happens is, what we'll do is you've already reviewed the financials to make sure that the financials work for you, and then what we do is we set up an in-person meeting and during that in-person meeting we'll get to meet the selling doctor and talk about your philosophy and how you think medicine works versus theirs, and find out what procedures they do and what they refer out and what type of animals they see, and make sure that it's that it's a match, because that's the, that's the cue we're a 90 equine facility, but you love cats and you want to be a cat only practice.

Speaker 2: 17:55

That's probably not the right fit no, definitely not, it happens we're gonna change it. We're gonna change it from uh bill's bill's horse that to kelly's cat corral.

Speaker 3: 18:12

I don't think it will work, but you know.

Speaker 2: 18:14

They might take the money but it wouldn't work. So you know, kind of back to the original thing. You know you've got veterinarians out there who are worried. Maybe they're in a rural area or they just aren't sure. And you know what does it hurt to have a conversation with a practice broker like yourself, I mean.

Speaker 3: 18:35

Conversation's always free.

Speaker 2: 18:37

Yeah, Same thing on the insurance side. Like, just talk to somebody. I mean, that's the one thing that I've found is I've built in my own team, my own network of people like Kelly and other individuals is we generally just love helping veterinarians, Exactly. And so you know, like, hey, you want to hop on a call, I'll give you a half hour hour, Like it doesn't hurt anything, to help you on your dream, whether it's sell the thing you worked on for all those years or you're a five-year vet out of school and you really want to own something like what does it look like?

Speaker 3: 19:09

You'd walk them through what we just have been talking about right, exactly, and I always tell them to interview multiple brokers, right. Just don't speak to me. Speak to someone else. I may not be the match for you.

Speaker 2: 19:19

Just like buying a practice right Personality match, all of it.

Speaker 3: 19:23

Definitely all of it, definitely like. I think that that I'm the only, I'm probably the only broker out there's gonna say, oh, talk to this person, or talk to that person. Yeah, because I know that, with the process of how we offer our services at dvmh, it's probably the best fit for you, because I'm not doing the valuation, I don't have a dog in a fight. So here's the price. Here's what. Here's the price. Here's the real monetary value of your practice.

Speaker 2: 19:51

Unaltered or un. No one's got their finger on the scale at DVM Match to try and figure out how to maximize what DVM Match is getting out of the deal. You're just trying to help the veterinarian. You get paid in the end, whether it's big or small. I feel the same way about insurance. I'm not going to try and cut the rate to help Like, oh, you should work with me, here's the lowest price. Like, you get what you pay for, right, and if you don't want coverage, I don't have to sell it to you.

Speaker 3: 20:16

But I'm going to tell you what's going to happen if you don't have it Exactly Because sometimes, when people ask me if I'm the cheapest, and I ask them if they're the cheapest, yeah, and they're like well, no, I'm not. I was like, so why should I be?

Speaker 2: 20:30

you shouldn't ask me to be the least expensive when you're not and at the end of the day, you know whether it's an extra point or whatever it looks like on the deal. I always I've always viewed this as you know. I'd rather just help the veterinarian, right, I'll get paid in the end. I'm not worried if it's you know one, this or two, that or whatever it winds up being Like. It's about helping the veterinarian. We're in business to help veterinarians. Veterinarians are in the business to help animals and that's, you know, that's what's in their best interest to help them out with. So as we start to wrap up here, kelly, what's you know one or two tips you would give the veterinarians out there who are thinking about buying or selling? You've got vast experience in a whole different number of areas in the business area of veterinarians. What's one or two things you would give a veterinarian as a piece of advice if they're looking to buy? One for each buy and sell.

Speaker 3: 21:25

If I was looking to sell a practice, I would look maybe two to three years ahead of time. Yeah, start early, right, start early. That's the key, because if you don't, and next thing you know you have a life event or you just feel as if I need to get out today. Things don't always happen that fast for you. Yeah. So you need to understand where you are now because, like we said, I feel really bad for people who think they have something of value but they really don't because something else that we all see they waited too long.

Speaker 2: 21:57

somebody got sick, spouse something, and then you wind up having to fire, sale it versus get the true value.

Speaker 3: 22:02

Or there's certain circumstances where you don't really have a good practice. So another thing that we do provide is a hospital opportunity report really have a good practice.

Speaker 3: 22:12

So another thing that we do provide is a hospital opportunity report. So the hospital opportunity report would tell you, look at the financials of your practice and do a real deep analysis and say, hey, based upon what your practice is now, if you're going to get out in the next three to five years, these are the things that you can do to make your practice more profitable and make you a more successful practice owner.

Speaker 2: 22:30

So kind of like meeting with a real estate agent and you're getting ready to sell your house and the real estate agent walks through and says get all the family pictures out of here. You want to paint the kitchen. I would say, put a new roof on, because I'm an insurance agent. But the real estate agent is going to say, do a new kitchen. And so it's fixing the house up to sell, so to speak. And it isn't necessarily just buy new equipment or something like that. It it can be the back end stuff, because the equipment I mean there's plenty of places to get equipment right. You don't have to worry about changing out the x-ray machine to sell the practice it's. It's cutting out some of the expenses that you're maybe spending on yourself taking trips to West Vet to get CE. You want to cut those out three years ahead of time. As fun as it is coming down here, you want to cut that stuff out because that drives the bottom line right.

Speaker 3: 23:18

Yeah, or just when was the last time you changed your pricing in your practice? I think that's the biggest thing. Opportunity that people have out there is that sometimes they haven't changed practice practice in three, five, six years and there's certain levels that you should make as far as profitability towards those other services that you offer.

Speaker 2: 23:40

So there's a lot of opportunity or a lot of information out there like aha benchmarking. You know there's a lot of benchmarking opportunity out there across a number of industries. I'm sure you assist your practices with some benchmarking stuff. But hey, I'm a two-vet practice. This is how many appointments we see, this is what we do. Where should I be at revenue-wise? And if you're not there, probably want to make some changes, and not six months before you sell, three years before you sell. That way you have time to get those financials in Correct, all financials in Correct, all right. So that's on the sell side. What would you recommend on the buy side for a veterinarian thinking about buying? What's the one piece of advice you would give them?

Speaker 3: 24:27

I think it's the idea of knowing what matters to you most. Okay, so if you are a associate and you're looking to go out on your own, sometimes you want to start, sometimes you might want to acquire. If you care what the place looks like, where it's located and the equipment and what the finishes look like, you probably want to do a startup.

Speaker 2: 24:44

If you want to have control over everything, deal with the builder, go get a loan, do a build-up construction and put your fingerprints on everything.

Speaker 3: 24:53

Right, but on the other hand, if you say, I'm okay with commute.

Speaker 2: 25:00

I want a turnkey.

Speaker 3: 25:01

Yeah, yeah, I'm just about the bottom line in taking a business and paying off the debt of the business and creating a life and growing a business, then I think you are a good candidate to purchase a practice.

Speaker 2: 25:14

Those are some great tips. Well, I really enjoy our time here at West Vac Kelly where we chat a little bit about veterinarians, and I know we had talked on the phone about trying to get a couple other opportunities connected. You're down in the Arizona area. What area of the country does DVM Match specialize in? And then where do you specifically? What's your area? So we're a national company, all right. So anywhere in the country DVM Match is going to be able to help out a veterinarian. Buy or sell. Fill out your profile where you want to be and they'll help you get set up. And where do you specifically? What's your territory within? Because I know there's a few of you with DVM Match on the broker side. What's your area?

Speaker 3: 25:53

So currently everything Colorado and West.

Speaker 2: 25:56

Colorado West. So if you're Colorado West, you're dealing with Kelly Jackson out of Arizona and he's going to hook you up, no matter where it is west of Colorado. You got it All right. And where can people find you online? In DVM Match? We'll put some information in the links, but for those listening who don't want to look it up, how do they get a hold of you?

Speaker 3: 26:16

Oh, it's pretty easy. Just go to DVMMatchcom. That's our website. It gives you all the information you need to know. That's DVM Match.

Speaker 2: 26:26

DVMMatchcom and then we'll have some information in the show notes. Well, it's been awesome chatting with you, kelly. I hope the show's going well for you. I know it's uh going well for me, just connecting with uh individuals like yourself. And uh don't forget veterinarians to like, share and review the podcast. It helps with the algorithm and uh just uh, another great episode of the veterinary blueprints podcast live from west vet in las vegas. Thanks for the opportunity. All right, thanks, kelly. Have a great day, everybody. You.