By Corey Young, DDS, MBA, CVA, ABI

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 have had your professional world rocked. You’ve probably had your hours cut. Some of you may even have been laid off. Fortunately, 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 your ship afloat.

Most of you have thought about buying a practice at some point, some of you have been seriously pursuing ownership. There is going to be a lot of advice out there right now saying that it is far too risky to buy a practice and it is better to get/keep a nice safe, secure job. I am going to give you four reasons why you should do exactly the opposite.

One, financing. Interest rates are at an all-time low. Most banks are willing to defer principal payments or even the entire payment for months. Some have even said a year. I’m not going out on much of a limb to say these are the best lending conditions you will see in your career. Historically, there have been periods of higher interest rates. When I was a kid in the early eighties, they were fourteen percent. There have been many times when banks weren’t as generous on the amounts they would lend. One hundred percent financing is not a given.

Two, taxes. The government is going to spend a fortune to deal with this crisis, we have an aging population, new social safety nets will probably be put in place, etc... It is hard to imagine a scenario where taxes don’t go up, maybe way up. Nobody gets hit in a tax hike as hard as a non-business owning high wage earner. As a professional, this is you.

Three, working for a corporation in a down economy. Corporations aren’t inherently bad entities. Many are fabulous. That said, unless they are a non-profit, they aren’t set up to be a charity. The shareholders and private equity backers are going to demand performance once this crisis is over. If clients hold off on elective treatment, keeping revenue up will require a high volume. You could be expected to see many more patients, in less time, than you currently do. It happened to physicians, it happened to pharmacists, it could happen to you.

Four, time. Odds are you have more free time than normal. No one, especially the bank, is going to expect you to complete a practice purchase before this crisis is over. That said, doing the work now could put you in a position to complete the purchase when the restrictions are lifted and capitalize on the built-up demand, which inevitably will occur.

In the words of Rahm Emanuel, “Never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”

By: Joseph Coury, CEO

Applying for a loan is probably not at the top of anyone’s list of favorite things to do. Sometimes applying for a loan can feel like a very opaque process, and often times it may seem endless. When you consider a Veterinary practice loan, you may wonder how to make the process easier, and what you can do to best position yourself for approval.

Different lenders have different parameters for approval. Some lenders place more importance on some factors and less on others. While not all lenders are alike, there are certain common factors most banks consider. Understanding these factors  can help you position yourself in the best way possible to multiple lenders.
 
Increase cash flow, eliminate credit card debt
Cash flow is one of the most important things a lender considers. The monthly expenditures reflected on your credit report – such as personal mortgages, car loans, credit card bills and others – affect your cash flow. High monthly bills can negatively affect your cash flow, while lower monthly bills can positively affect your cash flow. Consider how much credit card debt you carry from month to month. If you pay your credit card balances down to zero every month, this does not negatively affect you; however, if you do carry a balance, this can negatively impact your cash flow. To best position yourself to be approved for a Veterinary loan, you’ll want to carry less than $25,000 in credit card balances from month to month.
 
Student and existing business loans come into play
Student loans may also affect your ability to obtain a Veterinary business loan. Many Veterinary lenders don’t consider the total amount of student loan debt outstanding as the deciding factor, but will look at your total monthly payment. This is where you may consider Income-Based Repayment as an option to lower your monthly payments and improve your cash flow. Be sure to ask your lender about whether this may be necessary.
If you already own a Veterinary practice, lenders will consider the monthly payments on any business loans you have. Most Veterinary lenders will look for a global debt service coverage of at least 1.20x. This means that for every $1.00 of debt you owe – both business and personal monthly bills annualized – you have at least $1.20 to pay it with, from all your annualized income (income from either your salary, practice profit, distributions, guarantor, etc.)  A great exercise before applying for a loan would be to calculate your current ratio beforehand so you can either pat yourself on the back, or make changes to increase your chances for an approval.
 
Liquidity is key
Another thing to consider is your current liquidity – the amount of cash reserves you have, outside of retirement savings. Conventional veterinary lenders typically like to see at least six to 12 months of reserves when they consider your loan request. This means you have enough cash set aside to cover your monthly bills for six months to a year. If you are a current practice owner considering a loan, a good rule of thumb is to have between 5% and 10% of the total loan amount in cash reserves. Again, every lender’s requirements are different, but having adequate cash reserves in place will put you in the best possible position with multiple lenders.
 
Consider collateral
Conventional Veterinary specialty financing looks at collateral a little differently than SBA lending or non-specialty financing. Goodwill in an existing practice should suffice as collateral for Veterinary-specific lenders. Typically, they can lend up to 80-90% of total collections on a Veterinary practice without the need for additional collateral or a seller carry-back note. This amount will vary depending on lender and the situation; keep this in mind if you have an existing practice and are planning to apply for a loan. When you’re considering a startup loan, you do not need to put your house, your spouse, or first-born child as collateral. Specialty Veterinary lenders will allow you to use the future potential of goodwill, as well as equipment you purchase, as collateral for your startup loan.
 
Know before you borrow
As mentioned before, criteria for approving a loan may differ from bank to bank. This process may be arduous for the borrower, but know the criteria beforehand and you can best position yourself for practice financing. You can potentially alleviate the frustration of a loan decline before it happens. The good news is that rates are still at historic lows, and access to Veterinary-specific financing has never been easier. With this knowledge, you can prepare yourself for future success, for both the loan process and Veterinary practice ownership.

Owning a veterinary practice can be like drinking water from a fire hose.  It completely consumes you physically, emotionally and intellectually.  You not only wear the hat of a veterinarian, you have to also play the role of human resources, accountant, marketing, public relations, lease negotiator, salesman, supply management, janitor, referee, etc.  Whomever believes there is a 40 hour work week as a practice owner has not owned a veterinary practice.  Yet, all the public ever sees of you are running in and out of the door telling them there furry friend needs treatment.  They don’t see or appreciate your countless hours refereeing staff disputes, negotiating a new lease, fixing a broken equipment or installing a new light.  They think you are gone fishing or at your lake house every weekend.
Many of you have recognized the power and need to delegate.  You have people you can trust - your knowledgeable service rep now fixes your equipment, a skilled plumber who fixes the leaky sink and an expert commercial broker who takes care of your lease.  By delegating you have freed up your time, reduced your stress and let the experts use their skills to do what they do best.
When it comes time for your veterinary transition, you can try doing it yourself, but that’s like giving the patient a sharp veterinary instrument to spay their own pet.  They don’t have the knowledge, experience or skills to do it right and may end up bleeding in the end.  Or, you can entrust your veterinary transition to the people at OMNI Veterinary Practice Group who have the experience, knowledge and track record to help you achieve your goal giving you peace of mind, freedom and more happiness. Contact us today for a free consultation - 877-866-6053 or email [email protected].

If you already own a veterinary practice, have you ever considered buying an existing veterinary practice located close to your first practice and merging the two together?  If you ask most doctors, they will say the best way to build a practice is through taking care of your patients and bringing in new patients via word of mouth and marketing.  And, they would be correct.  However, acquiring a second practice and merging the two together makes sense in many ways.
 
First off, have you ever calculated the cost of acquiring a patient via old fashioned word of mouth?  It requires a lot of work if you include everything from building your brand, training your staff, maintaining a spotless, high-tech practice, etc., the cost could easily be hundreds of dollars or more per patient.  The cost of acquiring a patient via marketing is even more.  Acquiring a veterinary practice with existing patients can typically run from several hundred dollars per active patient to $1,000 per active patient.  Slightly less to maybe equal to acquiring a patient through a normal channel.  However, you get a high volume of patients very quickly in addition to adding income to your pocket.
 
Secondly, you acquire a stream of revenue at a near dollar to dollar relationship.  If the selling practice is producing $500,000 per year, you should be able to repeat the $500,000 in revenue by merging the practices together, or worst case, slightly below the $500,000.  The good news is you don't bring over all of the expenses of the selling practice.  You typically can save in a number of ways including reducing staff of the selling practice, utilities are not double as the practices merge to one location, there is only one rent payment (more on that in a minute), only one set of books, so only one payroll service and one bookkeeper and accountant and several other services can be eliminated.  So, while getting most of the revenue to increase your practice collections, you only get a portion of the expenses.  This increases the income of the practice owner - you!
 
Thirdly, by acquiring another veterinarian’s office, you reduce the number of practices in your area by one.  Less competition equals more new patients for you.  You can hire the selling doctor as an employee to help with the veterinary transition as well as perform some other things that will help with patient retention.  

Contact us today for a free consultation!

[email protected]
877-866-6053

By planning your transition carefully and working with a trusted broker in the Veterinary practice marketplace, practice sellers can ensure each element of the process is completed smoothly. But first, it’s important to learn more about the types of Veterinary practice transitions available for those considering a sale. In this article, the team at OMNI Practice Group explains the processes involved in several types of Veterinary practice transitions.

Partnership
Selling a portion of your practice via a partnership has its own pros and cons.  One of the pros is that if you can find a partner with similar interests and philosophies as well as a set of skills that enhances your practice and you get along well, you’ve found a winner.  The cons are that those types are difficult to find.  The ADA states that 70% of partnerships fail.  However, if done right using experts in partnerships, you can have a successful and happy partnership transition.

Walk Away Sale
A walk away sale involves the seller removing themselves and their business interests from the practice the moment the sale is completed. This could be ideal for those in the process of retiring or relocating to a new area across the country. But sellers must analyze whether they truly want to walk away from the business they helped create. To complete a walk away sale effectively, sellers must tie up all loose ends many weeks before the buyer completes their transaction. This ensures a seamless handover process and allows the buyer to immediately enter the business with a fresh start.

Sell and Work Back
This can often be very gratifying.  The seller sells 100% of the practice but stays to work as an employee in the practice.  The seller may cut back their hours or may keep up the pace.  The seller and buyer work together, and the seller may even mentor the buyer.  The seller no longer has any management responsibility or ownership.  He simply does clinical veterinary medicine.  As long as the two get along, this can work wonderfully. 

Customized Transition
Working with a Veterinary practice transaction broker can help sellers customize the sale according to their unique requirements. Brokers are experts in managing the transition process, from organizing the timing of asset sales to implementing buy back procedures once the sale has been completed. It’s important the company the seller works with has a full understanding of their business plans before they begin the transition process, as this will help reduce potential issues as the transaction is completed.

By having a clear understanding of the available Veterinary practice transition options, owners can ensure the right model is found for their sale process. To learn more, contact us today!

[email protected]
877-866-6053

​PRESS RELEASE
​
KENMORE, WA, September 26, 2019 – OMNI Practice Group, a provider of dental, veterinary, chiropractic and medical practice transitions, sales, valuations, consulting and real estate services, today announced that Joseph Coury has been named as Chief Executive Officer.
 
Mr. Coury brings more than a decade of banking experience to his new role as CEO. Before joining OMNI, Mr. Coury was Senior Vice President, Veterinary Division, at California Bank of Commerce where he provided start-up, construction and practice transition financing and other banking services to over 1,000 veterinarian clients throughout the United States.
 
“When we looked at where our company was going, we recognized the need for an individual dedicated to providing the leadership, organization and business development necessary to achieve our goals,” said OMNI Founder and Principal, Rodney Johnston. “Our search brought us to a known person who had the exact qualities we were looking for. We are excited to have Joe on board as we take OMNI to new heights while maintaining our company’s reputation for hard work and integrity. We are excited for the future of OMNI.”
 
In addition to taking over management of OMNI’s day-to-day operations, Mr. Coury’s role at the company will include strategic growth initiatives, expansion of educational programing, creating dynamic synergies within OMNI and being an ambassador to the brand.
 
“In the practice transition industry, there is no other organization with the talent and ingenuity that OMNI has shown in providing innovative solutions for their clients,” Mr. Coury stated. “Rod has built an amazing organization over the past 15 years and I am truly excited to join this team of professionals. I see no limit to the potential we can reach.”
 
About OMNI Practice Group
 
OMNI Practice Group is the leading provider of dental, veterinary, chiropractic and medical practice transitions, sales, valuations, consulting and real estate services. Headquartered in Kenmore, Washington, OMNI has additional offices throughout the U.S.
 
For more information about OMNI Practice Group, visit www.omnigroupintl.com.
 
Contact:
Rod Johnston, MBA, CMA
OMNI Practice Group
6141 Bothell Way NE #301, Kenmore, WA 98028
(877) 866-6053

By  Rod Johnston and Jim Vander Mey

​There are many advantages to owning a veterinary practice over being an associate veterinarian and not owning a practice.  For one, the average veterinary practice owner makes approximately 20% more in income than an associate veterinarian working for someone else.  A veterinary practice owner also gets to choose what procedures he wants to perform and what type of animals he or she wants to work on.  Heck, they even get to choose which animals they want to work on.  They can also choose their own hours, pick the days they want to work and how much vacation they want to take.  So, why aren’t veterinary associates owning practices?  What are they afraid of?  Here are a few fears we have encountered and how to overcome those fears:

1. Fear of the unknown – Associates feel they don’t have the experience in owning a practice.  They haven’t managed staff.  They haven’t kept financial records.  They don’t know what marketing to put in place.  They don’t know what benefits to give employees, how to hire or fire employees, or even how to balance a checkbook.
   
   Fear not, you don’t have to know everything at once.  You know how to do veterinary medicine.  That’s the first step in owning a practice.  You have a few years of experience working as an associate in a veterinary practice.  You’ve observed the owner working with and managing staff.  You may have experience leading a team in school, playing sports, etc.  These are all examples of good experience in handling staff.  You don’t have to know how to keep books right away.   We suggest getting a veterinary bookkeeper and then getting educated on reading financial statements.  This can happen over time.  Bottom line is if you are good at what you do and willing to learn the other parts of practice ownership, you’ll be just fine.   
   
   
2. Fear of taking on more Debt – Read Robert Kiyosaki’s book, “Rich Dad, Poor Dad”.  Not all debt is created equal.  There is good debt such as student loans and practice debt that helps generate an income and there is bad debt such as credit card debt where you just borrowed money because you wanted something.  Practice debt used to buy a practice that will help you make more money and build equity in an asset (the practice) is a positive thing.  As long as it’s a good practice with good cash flow, you’ll be money ahead in the long run.
   
   
3. Fear of the Corporate Giants – Don’t fear the corporate giants.  They have their own niche targeting the bargain shoppers and lemmings who follow the crowd.   They also have a high turnover in their staff and doctors.  You will provide excellent service with the same staff and veterinarian that the clients will see every time they come to your office.  In a corporate environment, they’re not sure who they're going to get.
   
   
4. Fear of not knowing what to look for – This is a valid concern.  You can educate yourself in a number of ways.  There are great resources via podcasts, YouTube, etc., that can help you know what to look for.  Quite simply, you start by looking at your desired location, then look at the cash flow of the practice and after that, you can get into the details.   There are consultants and brokers who can also help you with reviewing practices.  Identify your team that will help you overcome this fear.
   
   
5. Fear of a recession – Recessions happen, typically every 8 to 10 years and last 10 to 12 months.  You cannot avoid recessions or downturns in the economy, it’s part of life.  But, during recessions, employees typically get laid off of work.  If you own your own practice, you’re probably not going to fire yourself.  You’ll probably keep yourself employed and busy.  Owning a practice is a deterrent from getting laid off during a recession.

 
These are a few of the fears that we’ve seen over the years, and there are others as well.  But, the best thing you can do is educate yourself and talk to practice owners, brokers and bankers.  Seek advice and counsel from everyone you can.   This will help you make a wise decision in moving forward with practice ownership.

For a chance to get advice from a team of experts all in one place - broker, banker, attorney, etc., we have 4 Practice Ownership seminars coming up this fall, all are free!  Click the link below for more information.

​By Megan Urban & Jim Vander Mey, CPA, ABI
 
Thinking of selling your practice but don’t want to pay the broker’s commission? Think again. History shows that any time you sell your business and/or real estate yourself, the chance of failure of the transaction is over 50%. A commission will be much more digestible than the result if you try to do it yourself. We receive calls from senior veterinarians stating they sold their practices and took payments and it didn’t work out. After one year, they often must take the practice back and struggle to resurrect it to try and sell again. This is typically an experience that is new to both buyers and sellers. It takes time, marketing expertise, sales experience, buyer and advisor contacts, and lots of patience.

Your broker may spend hundreds of hours on your transition and your time is better spent at the clinic and planning your retirement agenda. Brokers do lots of specialized marketing which can be costly and time-consuming, and it includes many weekends and evenings meeting with potential buyers. When working with a broker, the average practice sells in about 6 months so selling it alone can be much longer. Your broker should have a list of qualified buyers and a commercial real estate license. If you own your space, it’s often critical to sell the building at the same time or get a solid agreement together for future purchase. Time and time again we see senior veterinarians sell the practice and lease the space with a loose agreement and lose their renter. The buyer decides they like a newer building down the street and leave you with an empty veterinary building.

A good broker will determine the value of your practice and there is much that goes into this process. It’s not just about collections. Everyone’s goal should be to sell at a fair price in a timely manner.  If the price isn’t “right”, the banks won’t finance, and you certainly don’t want to carry the loan. If you get pressured to sell too low, which we often see, you can lose tens of thousands of dollars. Brokers spend a lot of time working with all the trusted advisors you need such as veterinary specific banks, CPAs, and attorneys to determine the value of your practice and facilitate a smooth and successful transition.

By  Megan Urban and Jim Vander MeyWho can help me? 
This is a very important decision and time for you and your family, so it’s critical to build your team of trusted advisors, such as veterinary specific broker (with a commercial real estate license), lender, CPA, attorney. These professionals have done many unique transitions, and often with each other, so they work well together and know how to provide you with a successful transition. You can use your relative or friend in these professions, but they can’t know the things veterinary specific advisors know. Experience and knowledge in a select niche are worth its weight in gold.

Can I afford a practice and associated real estate?
Veterinarian-specific lenders understand the veterinary industry and understand that you may have student loan debt in excess of $150,000. If the practice cash flows and provides you with the money to pay your practice and student debt, plus living expenses, you may be good to go. If you are thinking about a start-up, you will most likely need to work part-time somewhere else as you grow your new practice. Your trusted advisors can provide you with ideas to assist with your startup as well as potentially referring to a veterinary-specific marketing company. So, the answer is, typically, yes, you can afford a practice and associated real estate.
Sometimes, depending on the seller and your finances, you may rent a few years. The things to consider here are that if you rent, you may still have the seller “visiting” when they want and still act as though it’s their building and try to deter you from making your own decisions. It’s hard to make changes and you will someday understand this! If you rent, you will want your attorney to ensure there are solid details surrounding future purchase.
Some veterinarians prefer to own their own real estate and that can be beneficial for those with property ownership goals. Leasing in a commercial space or strip mall can be worth the potentially high rent if you have the opportunity to gain increased collections.

What do I need to know when looking at potential practices?
Where do you want to live and work? Once you determine the general location, look for a practice with a good and visible location and parking.
Work with your broker or buyer-representative to assist you to review the formal valuation or the following statistics.
Last 3 years financials to see collections and expenses. Some expenses may be backed out that would not pertain to the new veterinarian, such as “large” continuing education, cars, 401K, and family members on the payroll that may not have an active/necessary function in the practice.

I want multiple offices.
Having multiple offices can be profitable if done correctly. Ensure you have solid processes in place that can be replicated. Consider doing a demographic study to determine where you want your locations. If clients may be going to more than 1 location, ensure your veterinary software is capable of being accessed by all locations.

What do I need to know/do before starting my first day in my new practice?
Work with your CPA to set up your entity, accounting system, payroll, and tax payments. Plan to have a confident first conversation with your new team. They will be anxious about the transition so you will want to put your arms around them and help them understand you want to continue the quality care and any small changes will only be for the better for clients and team. Be prepared for difficult questions such as asking for a wage increase, change in schedule, or complaints about other team members. Guide the team on how you want them to discuss you to the clients and how your goal is to retain clients.
Become familiar with your veterinary software. Most veterinarians and teams do not maximize the reports and statistics available to you. Remember, your veterinary software and accounting system are the 2 biggest tools you have to run your practice.
 
Purchasing a practice, with your team of trusted advisors, should be a pleasant process that leads to a profitable and enjoyable career!