Welcome to this month's practise management webinar from the webinar VET. It's Alan Robinson here from Vet Dynamics, doing something my mother always said not to. I'm hosting myself this evening, along with my wife, Vicky, here to really give you an update on the really corporatization and the sales and the movements in the changing the profession as we go at the moment.

Big thank you to Saint Francis Group, Alan and his crew there for hosting this, Chantel and the Simply Health team, Simply Health, and of course James and Kay from Eight Legal who all make this series possible and we thank them very much for their ongoing support of the whole series. For those who know me, Robson and I run Vet Dynamics, we look after independent practises, in the UK and across Ireland as well now. We've been working in the veterinary space looking after independence, for quite a while.

But one thing that's developed over time is a lot of our clients. Who are a lot of the late Gen X's and baby boomers are moving into the retirement stage. So we now end up finding ourselves working to grow those practises, get them very profitable, get them, in a good state, and, but we do have to now help them sell them because the Stays we're at, there is a corporate buyers who are there to take on that purchases.

My wife Vicky, she was one of the first non-veterinary owners of practises in the UK when the laws changed back in '99, and she's run her own business, sold that in 2007, now works with us at Vet Dynamics, but she is really the main driver of the, transitions to corporate practises of a lot of the practises we are, and is now working generally in the, UK market, helping practises make the right decisions around their either succession, their selling opportunities, and in many cases now startups as well. Now, we did a webinar back in October last year, which was, should I stay or should I go? And I think some of you might have been on that.

But this is really just an update. We thought things have changed so much over the past. Couple of months that it probably worth an update, see where things are, and we, we actually at the office get a lot of ongoing questions, a lot of what we frequently asked questions around really what is going on in the market.

So we thought we'd take this opportunity to really answer some of those questions. What I'd encourage you to do. As we go through this, we're trying to cover some of the main questions we get.

Now, if you've got further questions, go to the bottom of your screen. If move your cursor over the bottom of the screen, a Q&A box will, tab will appear, click on that and there's a Q&A box will appear. Put any questions you have as we're going through it in the Q&A box.

If Some of you would just like to type yes or hello in the Q and A box just to show, show me it's working, we can, answer those as we go. It's completely anonymous if you wish, so we, we won't divulge any names, but, OK, just about to say your name there, OK, yes, yes, hello everybody, we're getting a few through. Thank you for that.

. So if you have any other problems with your webinar, if you go to the chat box, Catherine from Webinar Bet will pick those up and sort those out for you as well. OK, so I see you've got a few people in here, so that's coming along well. .

What I might be interested in is just to frame this if, if, if, and I'll spend maybe a bit more time on one or two things, are there any actually burning questions before we start? Is what's the general flavour of things? Is this just curiosity, what's going on out there?

Has anyone really don't know what's going on and would like to know more. So if there's any specific questions, just feel free to pop those in the box now and we'll sort of address those as we go. .

Right, so we are going to talk mostly around the decisions of selling because that's the prime thing. There is also a major shift on succession planning, which is kind of the other option now, for those starting up very different options as in it's almost impossible to buy a practise, so we're seeing startups as well, not really going to cover the startup place, but we'll give you some, references and some information at the end of the webinar if there's anyone interested in that side of it. As we go.

So really, the, the questions that come up, and these are sort of the key things that people ask us is who really can you sell to. So if you're in a retirement horizon, you have a practise and you're ready to sell, you want to get out for any reason, well, the traditional models have always been, the. Something.

Have typically been sell to a current member of staff, that's, changing at the moment, there still are some practises that are selling to incumbent vets, and we've had one or two of those, very principled beings, in that, and really they have taken a, stance not to sell to a corporate and maintain independence. There's certain issues around doing that and it's quite reasonable thing to do. The key Downsides of that is one that you will tend to get less money for your practise because to sell it to an incumbent, you need to sell it at a fair market rate, which at the moment, unfortunately, is well below the corporate offering.

Equally, you have to have some legal contractual information in there in that they don't just go and sell the practise the next day, for a corporate amount. You need some sort of legals to protect you from the clawback. From those.

So, second thing, you might have a private vet looking to buy a practise, so we get inquiries all the time from younger vets who are looking to buy practises, and really they're in the same situation whereby they will, be looking around, but of course there's nothing to buy. Now Vicky's here and dealing with these, and she has a little cluster of vets who are looking for practises. So maybe you'll give us just a view on what sort of practises that would be available for them.

Well, well, they're just completely struggling to compete. I've got a practise at the moment that is quite small, but still the corporates are interested, and the amounts they're offering, that there's a couple of young That vets privately trying to fund it and the banks just can't fund for the money to match the corporate offerings, which is, is really, really sad. The only ones that I seem to be able to get for these young entrepreneurial vets are the little one vet practises that the corporates just won't look at.

And having said that, they still will look at some of them if they are close enough to. One of their hubs where they can, fly other vets in to, to maybe man it on a part-time basis. So it's hugely competitive, and it's the ones that are in sort of outlying villages or the middle of Wales or places where they can't, where they can't get their managers to, that the only ones that are available to buy.

Thanks Vicky, a couple of questions come through. If you sold your practise to a corporate, would you use your sale proceeds to start up again, that's a very good question. We'll come to that in a bit and really talk about the post-sale options that come up, in the situation.

Another question here is, I was told that probable corporate buyouts will peak when they get to about 60% of the market. Is that your opinion? Well, you saw it on the beginning of this, webinar, I was sitting in front of a crystal ball.

Yours might be better than mine, but that is a really good question as well. We'll come to that in a minute, as we go. I've been told they expect their corporate due diligence is expecting it to go up to about 80%.

Of ownership, but the buying may calm down a bit before it gets there. OK, we'll have a look at that, in a bit. Another question just popped through, can you give us a rough idea of multiples of turnover that we can expect from corporates, please?

And again, we will cover that as we go, but these are all really good questions and very, very, Similar to the questions we get asked on a weekly basis, so if we haven't answered any of these by the time we're finished, come back to us and we'll cover those. Let's just push on through these. Obviously, we still have local practises wishing to expand in its area.

These tend to be the larger ones, so probably the what we call mini independent but corporatized practises still independent. So we're talking like the White Cross type of arrangement, the Goddards, etc. Still independent, but obviously have ambitions to grow.

Those really also are struggling to buy practises. So they are mostly working on a startup model if they're expanding at all in that way. So they're actually choosing to invest in looking for property in vacant areas, or not even vacant areas anywhere that they can and grow their practises that way.

The key thing is, which is what this is about, corporates willing to pay the top price for the practise in particular location, high level of maintainable profits is the key thing. So that's kind of the only game in town at the moment in terms of place to sell. But of course there's huge money coming in through private equity in particular, and of course that means they're paying super high prices.

The other thing is there's up to 6 buyers in the market at the moment, so that means we have a bit of a seller's market. I must update my corporate slide, but of course the key ones we have are CVS Independent VetCare, we have Mediett, we have the Vets for Pets, companion care, joint venture model, and then we have vet partners. Linnaeus and then we have sort of a couple of large animal, corporates buying up farms which are, synergy and origin are coming through.

This is our latest slide of current purchases, this could be out of date. As we speak, we, we can try and keep a tab on this, but the reality is, all these corporates have a number of practises in due diligence. Vikki, what's the sort of estimate of practises in due diligence at any one time?

I spoke to one corporate in December and they had 80 million in due diligence over the next few months. That was just, just one of them, so. Times that by probably 4 covets for pets don't buy too much.

It's it's, it's very, it's hard to tell a lot. So what we see here, now the interesting thing about this, it's very easy from a perspective just to lump everyone into corporate land and say well they're all, they actually all do have different purchasing criteria, they do all have different business models at work and things they're looking for. They all have different future strategic scenarios as well.

It's a really important. To be able to understand what they, or have someone who does understand that process because it can actually influence very much your sales decision, as we get into this as well. Interesting ones like Vett Partners, I think when we did this webinar, end of last year, they were only at just over 70 or 80, but they're massively grown in that time.

Linnaeus is picking up, very rapidly as well. Our, our, they, because what they've done is now pick up some of the smaller groups, so Village Bet, went into that group and that massively grew it. Now Vets for Pets is interesting, they are not generally purchasing practises, they are, they have a lot of pet shops, they're still trying to put practises in, they're running a joint venture model.

They do have ambitions to open another 40 or 40 in shop practises this year. So we're seeing. Not only practises being aggregated, we're seeing new practises appearing at particularly in the joint venture model.

And interestingly, we're seeing an awful lot of startups, coming on the scene, purely because like, these vets cannot buy practises that they are forced into a start-up mode. So we're getting a couple of things happening here. We're getting the aggregation.

Or practises under these corporate banners, we're also getting more practises growing, in that, more practises available. And then we've got the different business models coming through, and also separation of those, as we come out. CVS is interesting and that they have a, this is my take on it, this is a very personal take, so, so don't take this as gospel because there's plenty of stuff going.

On underneath the bonnet that none of us have a view on. But of course, CVS have 450 or so practises, but they also have the laboratories, the cremation, the referral, the wholesaling and the product and the online pharmacy. So they have the full value chain across the board.

So they have a, a different model. Of course, they're now, floated, they're a limited company, they have shareholders, they need to keep happy. Their share price stumbled a little bit before Christmas.

It's recovered again now, so they're kind of the barometer for the, veterinary profession. IVC have, are the biggest of now the UK corpus. They've topped over 530 practises now, or outlets.

They have combined with Evidencia, which is one of the Nordic, corporates, they have 220 practises in, Norway and Sweden and Holland, . And so they're probably the largest in terms of geography and also in size, and growing ever so rapidly. Medivvet is obviously private and private equity.

It is a, they've been around for 30 years I think now, nearly Mivvet, but obviously recently growing. Their portfolio, in the UK only at the moment, and doing very, very well with that. Interesting, Medi, CVS IVCET partners when they partners are tending to do complete buyouts.

They will buy your whole practise. You, if you stay on, you become an employee within that practise and they take over the whole business. Medi.

That has an interesting joint partner model in that they will, part share your business. They will buy up to 50% or more than 50% of your business, and leave you with the shareholding, to sit in there. So they keep you in as a partner in your own business, which is a, a different and interesting model for some people and can work very well for them.

The smaller vet partners Linnaeus, they are generally aggregators, they will probably resell at some point to either a bigger corporate or another corporate. We could get corporates coming in from Europe or America, looking to get a footprint in the UK. And, they would be prime targets for those sorts of entries that way.

Obviously, Vets for Pets is part of the Pets at Home Group, which is a much, much bigger organisation with very deep pockets looking after that. And they're a limited company as well. So it's an interesting and mixed market.

We've just come back from the States, from the New York et Show before Christmas, and I always thought the states was well ahead of us in this corporatization. But to be honest, they're only 15 to 20% corporatized, they're big ones that in the National Vets Association, the VCAs, etc. Banfield, they probably only have, yeah, Banfield's the largest with 2000 practises, but don't forget there's something like 35,000 practises in the states.

So it's not really anywhere near, and to be honest, the states is looking at us. In the UK and the Nordic countries to see how this is going to roll out. So really interesting situation.

We would say that we're probably hitting the 50%, someone asked a question, it'll top out at 60%. Well, the rate is growing at the moment. We're not so sure.

We could see that actually accelerating past that 60% up to 70% maybe, but we just don't know. A lot of things go into that, the economy, will have an influence on that. As long as there's a need for private equity to put their money into safe but growing, markets, which the veterinary market is giving 7 or 8% return, they will keep putting money in, that means they'll keep buying.

And that will keep the whole thing moving on, and while there's multiple buyers with lots of money, the prices will remain high, for the foreseeable future. So we'll see how that goes from there. So, What are the selling criteria is really what we're, we're looking at, what is it that makes a good sale, for you.

So key things to look at is multiples of, and so one is turnover, traditional model was 1 to 1.4 times turnover and a good practise, that seems to have gone out the window now with the buying frenzy going on. We've had multiples of up to 1.5 to 2 times and probably 2.5 to 2.5, but, but they're free body hooks on the really rare multiples of turnover and the raree bit does, and they are, it is the bigger practises that they, that when they fight over them, that you get those higher multiples of everybody thinks that their little practise might command the same, but unfortunately.

Not that, not as much. So the point we're gonna make here, we can tell you all sorts of marvellous stories of what could happen. There's only one way to find out what will happen.

We'll come to that in a minute. Obviously, profit is important, but the scramble seems to have moved towards geography and footfall at the moment. Profit is obviously.

Important, but even practises with modest profit still seem to be commanding fairly good multiples at the moment. So the, the old model was when you were selling a practise, it was 3.5 to 4 times EIDA, which is the earning, the profit before tax and, and, and depreciation.

That went up to 4 or 5 times in the early days, that sort of hit 6 to 7 in the heyday, but we're actually seeing probably, 7 and 8 was more normal, and we've had 1 or 2 up to 13, and 2 at 15 apparently. Again, exceptional, don't, that's not the, the, the bar, that's not what we're aiming for, but it is just showing if you're in the right place with the right practise. People are willing to pay for it.

Other things are location because what is happening now with 50% of the market under corporate ownership, they are doing a hub and spoke model, so they will get a centralised hospital, with referral, with after hours, with specialist services, what they need is footfall, so they will buy any practise within the geographic location of referral and after. Hours to infill that. So this is what Vicky was saying earlier, even smaller practises, the ones typically a corporate wouldn't be interested in, are now coming under the radar, and being, sought after and bought.

Like I said, it does rely on that, location. So if you have 2 or 3 of the corporates in your area, they will be interested if they can hub and spoke you into that process. .

Again, this is a little bit of a diminishing list. I mean, management structure basically is, are you still inherently valuable to the practise if you're the owner, if you need to be there for the practise to be successful and functional, that puts a limitation. Now this starts not to affect the price so much but certainly the conditions by which you can get out of the practise.

So that's something we'll discuss in a minute, is actually dictating your terms. Some people obviously will say, just know there's someone in the background typing, if someone's got their microphone on, could they just mute that for us, thanks. .

So it's the conditions under which you wish to leave. Now if you're looking for retirement, you might want to sell up and leave almost straight away. There is, there used to be a much of a tie in process, as well, but we'll we'll discuss on, on what those conditions rely a bit.

And of course they're gonna Lease the premises off you, and we'll talk about property in a bit as well. But generally, if you own the property, you will earn a rental income, from that property. If you lease the property, they will take over that lease, as well.

But of course, leases are full repairing, generally, and so they really want it in fairly good condition as part of the condition. And to a degree, and this is the interesting part for me is I While the acquisition frenzy is on, the focus is purely, seems to be purely on acquisition. Now, if there's any corporate buyers in the audience, I'd love to hear from you, but what is actually happening with these practises post acquisition, they have their business managers who will look after it, but it's again, with all, like all of us suffering with recruitment problems, getting vets, getting nurses, growth potential is really flattened out across the profession.

. And particularly, I think these corporates will need to seriously start rethinking about investment in their own growth potential of how they're gonna manage that. It's gonna be a shocker in a year or two's time to wake up one morning realising you own 500 veterinary practises, and you really have no idea how to look after them. And the people in them.

And my concern, and I would, yeah, as a professional and as a vet, is there's real people, real vets, real nurses working these businesses, doing their damnedest to do good veterinary medicine. I just really hope the infrastructure's there for the future, that they can grow and develop as a meant to. And I'm, you know, I'm sure some of them are thinking about it, but I'd love to see how that's gonna roll out in the future.

And we are the leaders in this, as I say, we can't look over the pond and say, That's how that, well, Banfield's kind of been doing it for a while but different models, different way of doing. The other interesting thing is you have a clinical expertise, your specialism, orthopaedics, ophthalmology, cardiology, any of those allergies, they will want you as well. You are valuable to them, they want to keep you in and they will offer you a very good deal to stay.

Now that might be full-time, it might be part-time, but that is all part of the negotiation process that you need to go through. So this whole thing doesn't come down to simple metrics of turnover or profit. There's a multiple number of things that work here that you really need to understand, in the market and understand the individual buyers' take on it.

Just another question's popped in here, what happen to property value plus goodwill plus gluten that drugs and the value? Good question, . What the old value was we did a valuation of the goodwill, then we looked at the equipment and ran round and looked at all your mosquito forces and see how many of those you had.

We checked all the out of date drugs on your shelf and we looked at your office furniture and computers, and we valued all that separately and that's kind of came up with the value. What they're now offering all of them is a lock, stock and barrel price. So if they offer you the million pounds, it is the million pounds for all of, all of that, they will pay extra for the stock.

Of the drugs, and they will pay you extra for your debtors on the list. And pay for cash in the bank, and, and they will buy the cash off you, so you don't draw it out and get taxed, they will buy that off you, pay less tax on the cash. So there's a little bit of you.

So what they're buying is the value of the walk in, walk out business, all the equipment, all the stuff in there, they pay you extra for the drugs and they'll pay you extra for your debtors. The money owed to you, and then they'll obviously buy any excess cash you have, so you actually, that's a tax saving for you as you've asked about the property, that's they, they, none of them buy property, they like to rent it if you wish. To, if you don't want to be a landlord, then we just find someone who will buy the property from you.

There's lots of investors now who would like them because veterinary practises, particularly corporate owners, make very good tenants and it's a reliable sort of 7.5, 8% return on their investment. So you can easily sell your property on to somebody else.

I sit very amused at the veterinary profession. I sit at a little on my little high chair and watch it. So we've had practises who have sold out, done very well, practise owners sold out, done very well, now have a good whack of money in the bank.

They're now coming back and buying property off other vets who are selling so they can rent it back to corporate. So it's getting a very confused little, argument there. So key things to think about in terms of negotiation, .

Here is obviously turnover and profit, location, profitability, manageability, clarity of finances. So they're the things that we would be part of the negotiation on price and your exit conditions. They're the two real variables that you want to have negotiated on your behalf when you go into this.

Just to comment here, one corporate does buy property, OK, that's interesting, on that, but I think that. They wouldn't normally offer to straight away. Typically they would have a buyer, buying it outside of the corporate because the private equity doesn't actually want to own bricks and mortar, but that's a minor thing.

The property can be managed one way or the other in terms of. Now, this is sort of a view of the typical good practise. Now the reason I sort of put this in because a good practise is a good practise whether you sell it or not, and for those of you who are staying in the game, it's pays to, understand what a good practise looks like, cause that's what you should be aspiring to, whether you're going to sell or not.

And more so if you're gonna keep it, because it'll be your practise. What you're looking for is a high turnover practise. So if you take that as turnover per full-time equivalent vet, that's anything over 300,000 is actually doing OK.

We see practise and this, this is really what we're trying to get our vet dynamics platinum practises up to, etc. Larger practises, so anything over 3 to 5 vets, so over the million pound mark was generally the thing that they sought after, 5 is certainly what they're looking for, they're looking, because it's as much trouble to buy a 5 million pounds practise as a 500,000 pound practise is the reality, with these things. Self-contained sites, good properties, obviously with this, they, They're not too keen on lots of little lockups.

They will take them on as part of the deal, but lockups aren't really, really efficient for them, in terms of accommodation. Net maintainable profit means that the profit after the owners have been paid a reasonable salary. Because remember, you as an owner, stop taking dividend, and you will be paid a salary by the corp if you're staying.

And so they add that back in. What they would like to see is there's still a reasonable 15 to 18% profit after that happens. If that's happening, they've got a good buy, and they're willing to pay a lot more for that because they're not only getting the footfall and the, and the, client base, but they're getting a profitable, business into their portfolio as.

Well, within that, as I said earlier, specialist services, any, and I'm talking about sort of, surgical and medical specialties in terms of this particular referral and then they use a referral because they like the top end business of diagnostics and surgical income, that actually drive the profitable services. Now night service and on, Goodwill, they're not less worried about and I said what they will do if you run your own night service, that'll be part of your revenue, so you'll get the multiple of that anyway. If you're actually sending work away, it pays you to work out what that work is worth, because if you're sending, say, 50,000 pounds worth of work, After hours away to a that's, that's that's now or another after hours service, if that corporate buys it and can pull that after hours business back, they will give you a multiple of that 50,000 pounds, that's what they call collateral income.

So after hours work and referral work, it's worth sitting down and working out what that is worth, . In some terms of what you're sending out of the business, because if they buy it, they have quite likely could pull that back into the business, and they're quite willing to pay for that. So that's an interesting little addition in terms of money we don't really think about in, in terms of our business.

Good location, populated area, good demographic, good clients basically good demographic clients. Bigger practises, when they're over the 1 to 2 million mark, they really must have a structured management. If they sort of are sort of being managed by a bunch of vets who meet up once every 6 months, it's not really a good, structured business for them today because often those owners will leave and that will leave a vacuum at the top of the business, and that's just a, a recipe for disaster, for them to pick up later.

So they really want it non-owner dependent as much as possible. So if you're thinking. In the next 3 to 5 years or whatever, you really should be thinking about how do I actually make myself redundant in this business by putting good management and leadership structures in place.

And that's something we're doing a lot of in that dynamics now with our, leadership academies and our mastermind groups. These are the practises they decided they're staying in the game as independents, but that's really what they need to be doing. And of course, the premises, again, is really what's important.

Oops, I've lost my slide here. These are the ones that were less appealing as time went on, small practises as Vicky was saying, though they are now being picked up, if they sit within a hub and spoke. Area that they can be pulled into.

But generally, one vet practises are running sort of, 1 to 2 vet practises running on their own is harder for them to sell, poor demographics, multiple little sites is, is a bit of a mess for them, and this is where they are not so interested. Part of the problem is that they have so many deals on the table at the moment, these are the ones that will go to the back of the list is really the problem more than anything. They will consider them.

But they are a lot of hassle for not much return is the key thing. But they are, they're still looking at them and I've certainly got a few at the moment that they're all looking at even down to under 3, around 300,000, just little one vets that that they are looking at, so it does happen. Depending purely on location.

Again, a typical UK practise is running at 5 to 7 to 8% profit, obviously if that's after owner remuneration that's OK, if it's before m and remuneration it's not OK, it's not very profitable. Even so, there is a, with the current mentality going on there, these tracks are still sellable, but obviously you're not maintaining the, the maximum you could get from the value of the business, as you go on. Obvious night service.

These are all ex VAT prices that doesn't come into this, so yes, these are non-VAT prices. Again, the night service shared or the referral stuff is, Valuable but of course a small practise standing, less of it, so you just have a smaller multiple within that. Again, it's geographies, they they're now buying in Scotland of course north, east, north, west Scotland is, is very sparse, middle of Wales is very sparse, West coast of Wales is very sparse, .

It it's the populated areas that they're looking for, and practises are struggling to stretch to some of those places as we go, but it will come, it will come in time, as we go. Key thing with that is this owner dependency, if you're it, you're for sale is kind of what you've got to gather with that, and of course that if that doesn't fit your plans over time, you have to really consider how that's gonna work for you. OK, and then Paul Princess, as we go.

OK, OK, just, just to touch on that point we, we, covered earlier, there was a point whereby, They would look at a practise in terms of its financial returns, so when they first started buying, it was purely a turnover ebida. You need high turnover with good eI data, they pulled the highest prices as your eit data went down. That was your multiple reduced dramatically.

And when you're at the 4 or 5 times multiples, that was significant. I've said, there seems to be this major shift to strategic buying, where do I need to get involved? So the strategic buying's quite interesting in that you might get a cluster of corporate practises.

One will come up for sale in the middle of it, and you'd think, Obviously, that is the place to go to sell it. But then some of the other corporates will say, no, we want it because we want to get in that area and either disrupt or get a foothold in that area because we don't have it. So you can never pre-guess the buyer's intentions when it comes to this.

Their, their financial models are different. In terms of what they're looking for, their strategic, view of what they need, and what we don't know of that 30 or 40 or 50 practises that they have in due diligence, we don't know that they're in due diligence, so we don't know what else is in the area, and you never know anyone's sold until the day after they've sold. So you could be looking someone in the eye and say, what's going on?

I said, oh, we're fine, we're carrying on. The next day, they've got money in the bank and moved on to Bahamas, often happens. So it's that, that's obviously sensible business move, but that's really what's happening.

So again, all we're suggesting here, This selling for the best price and the best conditions or exit conditions is really quite a complex piece of work. This question came up earlier, how long, we don't know. It's accelerating, like I said, it depends on the economy, depends on, Confidence in the market, depends on private equity continuing to put money in, but even if the economy tanks to a degree, private equity, which is driving most of this, still needs a safe haven.

So there's a sense that private equity, will continue to invest in it they've done. So while there's practises for sale and there's money to buy them. They will sell.

And that's really the way it's going to go. So we're, we're sort of seeing, and you know, we're optimistic that it might have stopped at 50, might have stopped at 60, but we're kind of seeing it less optimistic, that's probably going over 70 as time goes on, which means there's probably still a 18 month to 2 year window of particularly high prices, but if we have, Some of the buyers get absorbed or step out, or reduce in number, so we're down to 2 or 3 key buyers, obviously that's gonna change the market buying process as well, cause their strategic intention will start to separate what they're buying over time. Question just came through, is Ebi matter if property value is very high, so, not sure what you mean by the question, as in, does it matter if the business isn't worth much if you can sell the property.

If you can just confirm that as the question, depends on what you want, but it wouldn't it be nice to have the value from the business and the property, is the two ways, so I'm not sure, OK. So that's interesting. So up until now, most vets have sold their businesses and made most of their money from the property they owned and earned very little from the business they owned.

And I find that particularly sad if you put 40 years of your life into your business and you can't sell it for diddly squat when you actually come to retire. And believe me, we've got a couple of those on our books that we actually, you know, feel, and they don't own property, so they're doubly. Out of the equation in that matter, but owning property is one business, Running a veterinary business is another.

So if you're really successful at owning property, great, but you're crap at running a veterinary business, that's not so great, OK. So what we're saying is separate those two thoughts. The property will either sell for an asset value, yeah, property value is very good at the moment, or it will create you a long term.

15 year income of property rental, which is a great pensionable piece, but that property, but the business really needs to be stand on its own for the goodwill is an EI factor, based on that. Here's some sort of key questions that pop up, that we get asked a lot at, at, events and also online. So simple one is probably out there.

Should I sell now while the money is good? Well, That depends on what what you want to do. I mean, there is your value, the, the reality is your business is probably worth more now than it ever will be after this bubble bursts, OK.

So if it's worth a million pounds now and you can sell it for 1.5. That's fine.

You've got 1.5, you'll pay off your debts, you'll pay your tax, and you'll end up with, I don't know, $750 to a million. Great.

But you don't no longer have a business, you no longer, you could then be employed back into that business on a nice salary of 65 to 70,000 pounds if you pay a full-time equivalent, so you're earning a salary and you might even end up with a 40,000 or 50,000 pounds rental income, so that's not a bad life, in terms of realising asset. And getting things done. Question I'll raise a little bit later is, who are you at that point.

Now, if you're looking for retirement, step down, that's a transition all of us have to go through at some point. But if you're a 42 year old bloke who's, or, or girl who's sort of been in the business, see yourself as a vet, and you were the village vet, etc. There's a whole identity piece goes on with this that we're not sure of the ramifications of over time.

The money is certainly there. What I would ask is, what are the other considerations as goes on. I think it depends on you.

If this is a comment come through, it depends on your age. If you are close to retirement, yes, but younger, I think the details aren't as great as they seem. That's probably succinctly put, but I would say it's an individual discussion, and this is something we spend a lot of time with, with anyone who comes to us is, Asking these questions around really what's your motivation, not trying to talk you into it, into it or out of it, but just clarity.

Because the thing we deal with in vet dynamics day in, day out, is somewhat damaged veterinary identities struggling with their businesses. For one, if we can solve that problem, that's great. But also, we're just wondering if we're creating If Pandora's box has been opened here and the stuff that's still in the box is the stuff we actually wanted, so we shall see how that pans out.

I've been made an offer from a corporate, how do I know if this is fair? Ah, well, that's me. It will, all the, all the first offers that come from corporates are reasonably fair.

We always find that if we then go to or if you've just been to one corporate, well, even if you've been, I've had cases where people have been to 3 corporates, if we then go out as Broker to all 6 at once, and the offers come in much higher, around 35%, sometimes more, and that's purely because they know they're competing directly against each other and this again is for one of these strategic buys. But on the whole. They will be offering more if they're offering against each other.

And if anyone has got anything like that, you know, they have got an offer and they're not sure, we're more than happy to have a look at it for you and, let you know what we think and what other offers we've had. Key thing that happens here, it's a bit of a psychological game. The corporates, accountants, brokers, all sorts of people are mailing people out, making offers, making promises around what they can sell you backs, etc.

Most of you are veterinary surgeons running businesses, and probably have never been faced with this sort of issue, you might have sold your house, you might have sold your favourite car, you might have done something of that nature. This is a major, major, life decision. And if, and the corporates are very good, they're they're actually very nice people, of sitting you down, taking you to lunch, telling you about how wonderful they are, what wonderful life you will have working, selling to them and working with them over the future.

And, you know, they'll catch your eye and you'll feel quite warm and fuzzy around the whole thing. Some you might not do and something the other. And they will make an offer based on that in very So, that's a good thing if you feel right about it, etc.

But the money will be compromised to a degree if you haven't done due diligence on all the buyers. Now, the buyers hate us because we actually do force up the, the price that they have to pay, but they've got more money than you and I, so I'm not too bothered about that. And it's not even their money, to be honest.

So I'm, I'm less bothered about that. What I am concerned about that if you are making this decision, you make it once in your life. Let's make damn sure that you're going to get the very best price.

And then we can negotiate the warm fuzzy place after that of your conditions. And at the moment, you as the seller, or as your broker can actually negotiate that is in the very best place to do that, unemotionally and unaffected by your own, situation. Couple of more comments coming in.

Heather, Heather, who works in our office actually, she's, she's doing a lot of the background work for this, the evaluations, the calculations, and all the sort of working with the back office stuff. And she's a, she's a hero as far as we're concerned. We've been doing projections, earnings, if sold now versus earnings, if they stay in and sell at old EI does in case anyone wants to compare now and later.

So there's a little tool that we're, we're using. I was gonna say if you sell at 10.5 and you've got to end up with that, if you stayed in business and were running at 20% profit, you would make that 750,000 back over 5 years, yes, you'd have to turn up, but there, there's tos and fros around this, Another comment come in here.

Having sold a few years ago, still working a little in my practise, I find the employee environment very benign. This seems understandable while acquisition gives growth, and acquisition draws to a close, it seems to me that growth then must become the front line, exactly the comment we made earlier. And then the employee will find our world anything but benign.

It will certainly change the focus. I think what, We're seeing here, and there may be people on this call who are in corporate employment, which is great. And I wouldn't say, mixed bag here.

It's about mentality, it's around what you want, and you hear disaster stories and working for them is the worst, and you hear really, really wonderful stories of, this is the best move I've ever made. I really do agree. But I agree with the point you make, In that, in that, the moment they've purchased you, they've put a computer system in or not, they've changed your wholesaler, changed your, card machine, and that's it.

Get on with it. We're too busy looking after more practises to worry about you too much. So as you say, quite benign management overview.

When that shifts, and suddenly we need to actually work on profit and performance and getting a team working together and having good client experience and high clinical standards, that's great, but it's, are we as a benign bunch of employees going to respond to that, or is the corporate gonna wield that hammer? In a way that works for us as vets, and that's my concern. They, and like a lot of these corporates are veterinary owned and managed.

So it's gonna be an interesting question, very good question, thank you for that, as you, . Would you be prepared to tell us what sort of percentage brokers fee you charge to manage your sale? I'll come to that in a minute if that's OK, but yes we will, .

I think Vicky's kind of answered that, what we would do is give you a fair market value valuation, we would then give you a valuation based on the factors that we talked about earlier, and then our best guess. At what, what the various corporates would be looking for, depending on your location and your property and all those things, to be honest, the best way to know what you might be worth is under a non-disclosure agreement. We put your details out to all the corporates, they will come back with an offer through the through us, through the broker, so you're not affected by it.

We will tell you what those offers are, and then, and only then, can you really make a decision around what you might or might not want to do. Now, if it's an eye-watering amount of money that's gonna change your life forever, You might have one thought, if it's actually not enough to clear your debts or, or make the rest of your life what you want it to be, well, that'd be another decision. But until you have that, and the point is, if you say, no, I don't want to sell, that's the end of it.

They won't come and be harassing you cause through a broker arrangement, they can't actually go direct to you. I did actually have a vet say to me today, if, if I don't do this, I will never know what I'm saying no to. I have to find out, which I think is, is a really good valid point for anyone who's thinking.

So the point here, we don't like time wasters and neither the corporates, but you, but this isn't time wasting, this is decision making, and you can't make decisions without reasonable facts and data, and we can certainly help you with that. Plus consideration of the other circumstances of your life. So it's not quite counselling, but if, but it does have a degree of helping you to come in, just come in.

For those who do sell, do be prepared to go through a period of depression afterwards. Now I would hope that's a. Part of the change curve, that people go through, it is a, a, a, and this is the point I was making earlier, for some of us, not everyone, some people love the transition to employment, being looked after by the cat's just jumped on the keyboard, being looked after in a corporate entity, still having the autonomy of their business, and that depends on the different corporate models.

So, you'd have, that is. Something we can discuss with you as well. It's a personal discussion.

And to just counterbalance that, I have got one particular vet who was really depressed as a practise owner, who, I sold his practise over a year ago and I only spoke to him last week, and he said, this is the best thing that's ever happened to me. I am so happy. I'm enjoying being a vet without all that.

Burden of of being a business owner, so not everybody, not, yeah, and my wife knows what I look like again. What's his other comment. So not everybody goes through a period of depression.

It can be the other way, and I think it's, it's a shame if if that has happened to you. Another quick comment, is there a difference between fair market offer and best market offer? You bet there is massive, yes.

At the moment it is so poles apart and it's not actually, it's, it's an unfair market offer that you're getting because it is, it is totally ridiculous, but that's just what the market is saying, so why not is kind of the question, . OK, what else can you do? This is, interesting one.

If you don't want to sell to a corporate, you have some principle that you don't want to do it or there's no offers coming through. Succession planning is still an option. Obviously, you're not gonna realise anywhere near as much money through a succession planning, and this comes back to fair market value.

You would have to value it around 4.5 to 5 times EID, for banks to actually take on a, a blending situation with you. We've had a few practises go through some of these arrangements where they, companies will come and help you do a company buyout or a a management buyout.

And again, they all have to be based around fair market value. They don't work at corporate valuations. Only the corporates pay corporate valuations is the short answer.

So if you choose not to, or you have a larger practise with a line of vets who wish to succeed. Come into the practise, you, we just go back to the old model, we, they, the valuations have gone up slightly on what they used to be. We can actually help set those up.

There's accountancy pieces and there's legal pieces, and we actually have people who can help you, . Do that and take you through. .

Like I said, we have had one or two who have actually sold to a a vet, where they could have had a corporate offer but chose not to. We've had one who chose a lower corporate valuation than the highest valuation they got because they chose not to sell to a particular corporate, out of personal choice. So there are options there but it comes down.

To a money sacrifice at some point. So if, the money is not that critical, you have a lot more choices. If money, but what we found is, once the money's on the table, it seems to become the centre of attention and the centre of the offer, because it seems to solve a lot of life's problems.

Whether it causes a few more as life goes on, we shall see. But it is very good for feeding children and putting petrol in cars, I found. .

What I'm gonna do, if anyone's got a question on that, or has some options, I'm happy to take some calls after the, the event, after the webinar on that, but really, at the moment, the skew is so large towards corporate valuations. If money is the critical value, that's really all you can do, from there. If you've got a tiny pra that you think, Won't sell, contact us because we do have buyers as well who are non-corporal private individuals who may be willing to invest in something like that.

OK, second thing that questions that come up is, what about my team and what about my clients? What will happen to my team when I sell and what they looked after. So this is your family, this is part of people you've nurtured, people you've employed, people who've cried in front of you, and people who have let you down and all sorts of things, family is family, what are we going to do with them?

In general, the corporates have transition teams, all of them we find tend to be very good, with, they like to announce the sale a couple of weeks before the actual due date, a month or so. They will let you announce that, they will come in with you if needs be, they will, Be there for a day or half a day with your team and they will actually go through all the all their questions and misgivings and wanting to know what's going on there, and then they will be in from day one with their transition teams helping the transition across and helping the change of things. We find that they are very empathetic and sympathetic to the whole situation, they, it obviously it doesn't pay them, To, lose staff, so they work very, very hard to maintain, there's a legal obligation for them to TP or take, take your full staff on a full, current contract, so there's no redundancies built into the programme, they don't want to do that unless they're pre-arranged in the sale due diligence, but you will know all about that.

There's nothing underhand about it as far as we know, very clean, clear. Process as far it goes. What you will get though is some people who have moved to your practise because they were working in a corporate and didn't like it, and then suddenly, oh, I'm owned by another corporate.

So those people have to make their own choices. But having been, having had my own practise, having, bought and sold practises in the past, what we constantly see, it's not corporatization that moves people, it's change. When I sold my practise and someone took it over, Within 2 years, all my staff had gone and new staff had moved in.

When it sold the next time a whole new staff moved in and moved it, it just happens with time. And, you know, on a cynical point of view, if they got a better offer, they would probably pack their bags and go anyway, in some sort of shape or form. But they are, you know, you, it's up to you to look after them as best you can while they're under your employeeship.

When they're not, you have to move on and make that happen. Now if you're staying on, that's often a very good thing because the continuity of your leadership and your input is maintained. We find that people don't, blame you for selling, basically, particularly the retirement horizon, we've got a couple of practises where the owners are relatively young, they're sort of selling because they have other things to do in life, they're staying on as part of the team afterwards.

And, the team is saying, fine, well, let's go with that, then it kind of works. So again, any questions around that, can't put any more than that, but we, they, we do find that they do work very hard. There's always going to be casualties, and there's always going to be disaster stories, and there's always going to be.

We hear the disaster stories first, unfortunately. OK, brokers, so here's this question of what we do, should I use a broker? Not necessarily, you can do it on your own, but I would, our experience is that using a broker or a broker who certainly knows the market, knows the veterinary market, and is doing the deals with all the corporates, will get you more money and like I said, our experience is anything from 35% to 45% more money.

In that time, what we've seen in the market, there's letters going out from, All sorts of people, and they tend to be sort of a a large accountancy firms who have looked at the veterinary market and saying, oh, there's something there, and they've suddenly got their mergers and acquisition department to start writing letters to people. But when you look at the process they're trying to put practises through, it really is, overkill, and they obviously do not know the market very well at all. It doesn't hurt to talk to brokers and find out, and, Any of them would no doubt give you testimonials and referees, people to speak to on how that was dealt with.

So, we would highly, highly recommend, a broker, we would highly, highly recommend ourselves as that broker, of course, but there are others out there, but if you want a non a confidential. And non-committed chat, certainly let us know on that, but I would guarantee this is, apart from anything else, it is probably the best way to get the best deal emotion free and guilt free as well. OK, so key things to remember.

Somebody asked how much we charge, oh sorry, if there is for the charges for brokership is some of it is fixed fee for some companies, and I can't speak for other companies, some of it is a fixed fee, that will include some accountancy and other such things. Others charge a percentage, we would typically charge 1.5% of the transaction, for larger practises sometimes that is reduced slightly.

Down to 1%, . If you already have an offer, the other thing that can happen, and we, if you just say I've already been offered 1 million, what we would say is, OK, we will charge you a percentage of anything above that 1 million we get you. So that's typically about 5% of above your already best offer.

And we can general, I think, think there's been we haven't improved on and often quite considerably so. Again, just because once the corporates have you in their sights, they get you to do a deal, they will make you an offer and you kind of then guilt and everything else kicks in. So, You'd have to speak to individual brokers on that, but that's kind of where we are with that, which is kind of typical of the fee.

How do you get one, OK, so this is supplies whether you're buying, whether you're selling or not, whether you're staying in the business, consistent growing turnover profitability, you've got to constantly have growth in the business and maintaining that profitability. You need to know the, know the market and achievable price, so you need a broker who knows the individuals, know the buying strategies, know their future strategies. You could sell to one corporate and end up being owned by the one you didn't want to sell to in 3 years' time.

So it's understanding that and really what the range of prices are. If we can sort of, if you've got some time to think about this or you're in a situation where you've got non-dependent management structure, is really going to be important in terms of your exit conditions, which basically is around how many days a week do you want to work, what do you want to be doing, what do you want to be paid for doing it, what holidays do you want, and you, some of this is negotiable and other is less so depending on the practise. Make it nice, make it fun and make it worthwhile.

Obviously, this is how you dress the place up. Having said that, quite often they're sold without them even going there, or they will sell by just by looking at your website and your figures. So, they don't necessarily walk into the building pre-sale.

So I'm gonna get a cardboard cut out, put a dog in it and see if I can, no, that's probably not really appropriate. Another question here is, does one corporate sell out to another corporate? Well, that's kind of what's happening.

We had a small corporate called Provets set up, they got to 8, 10 practises, 20 practises. And then they got acquired by IBC so that Partners is small enough to be taken up by another larger corporate, either one of the UK ones or one of the European ones, or perhaps one of the American ones. So yeah.

So this is stage 2 of corporatization. You have corporates growing and then the corporates eat the corporates, and then you have a reduction in that over time. So the answer to that.

Improve the negotiations, so professional and easy. We want it as easy as possible for you as the owner. And to be honest, this isn't skullduggery, there's nothing underhand about.

It's pure, honest, open discussion, and believe me, some of the open discussions we have in this house, late in the evening with these brokers is, quite interesting, but, that's what we're going on. And I said, we would suggest that someone who knows that business very, very well. Property, as I think we've covered that basically the property will be either, you could sell it and they will arrange someone to buy it and they will rent it back from those people, or you keep the property if you own it and they will generally pay you 7 to 7.5% of its market value as a annual rent, so it's .

7.5% is really what you're looking for, so you can have a long and they normally take a 15 year non a full repairing lease on it, so you don't have any responsibility except really insuring it, and, and, keeping it upright. Due diligence is another piece, so once you've made the offer, they've made the offer, you've accepted the offer, what they call exchange heads of terms, this is the deal and you've agreed to that, you'll go in and then you've announced it to your team, the the the the They will then come in and go through the purchase process.

There's a process that lasts probably about 3 months, depending on how organised you are of due diligence, and this is checking your leases, your accountancy, your, property, your equipment. You've you've got the things you say you have, and they are transferring your employment contracts and your fire and safety contracts and all that sort of stuff has been. We can supply you with a list of stuff that has to happen, if your things, if you prepare some of that before you go to sale, that saves time and aggravation, and what delays the sale is I can't find that document or that lease is now belongs to someone living in, Tasmania or something of that nature.

So these things are really worth thinking about a little bit ahead of time, and if people want a due diligence list, we can actually help you with that. Just to be clear, you wouldn't tell the team until towards the end of due diligence when you were close to completion, normally, unless you wanted to. Most people like to keep it, keep it to themselves until near the end when they're when they're buried, although they always sales always go through once they start.

Very, very rare that anything wouldn't complete. OK, a couple of tips. Just take your time if you need time to think about it, this isn't a bubble that's gonna burst tomorrow, there's gonna be certain time on this, but there's is a probably a time limit to it.

But if you want some discussion, you want to talk about things, you want a confidential, and I do show you confidential, arrangement for this, certainly available for that. That, my friends, is what a million pounds looks like. So you need a spare room if you're gonna do the business, but my question is, with this, if you do sell, look at, and I think someone made the point about age, if you're a certain age, you might have to live another 25 or 30 years.

Make sure your pension arrangements are suitable for such things and really whether that's gonna be enough to make that happen, whether you're gonna have to keep working. And these are really probably more the prime questions we would sit down and want to have a discussion with you, vet to vet and understanding really the, the humanity of the decision you're trying to make is really all I'm trying to say there. And the second question is, then what?

If you're not that vet, who are you, and have you made that tradition, the point someone made earlier about depression and other such things is very much purpose, mastery, autonomy of the things that drive us as vets and vet in particularly as individuals. If that's taken from us, we need to have some plan for replacing that or otherwise it leaves us in a degree of existential angst, but I won't go down. That path.

But just be aware of that over time. We're working some seminars with vets who have sold, looking at the next stage of their development career, and also some investment strategies for them to keep that money over time. So, the future, we see corporate practises probably going to maybe 60, 70%.

Over time, that may retreat back because what we do see is the growth of It's called them mini corporates or chains. They're probably independently owned smaller chains, a bit like the, White Cross, Goddard type arrangements. We do see working with some very large packs of employing up to 20 vets, there's still plenty of those around, who are offering their own graduate academies, they're offering their own, Management structures and, and sort of career paths within that, of course we'll have the smaller independents who are staying there, and a lot of those are in our vet dynamics and platinum, businesses are in slightly, you know, 3 to 6 vets, and believe me, there's gonna be a lot of startups come through and they're gonna be the ones that will fuel that next range of growth and I keep saying this, if you've been around as long as I have in this profession, you've kind of seen, The contraction and the expansion of all parts of the industry, this is just a new part of that with the corporate world, out there.

So on that note, quick summary, probably took a little longer than I thought we've gone a little bit over a half hour. If anyone's got any more questions, please pop them in the box. Or comments or thoughts, please let us know.

Thank you for . For the people who have contributed, I will finish with Joe Strummer, who's Singing a theme song? So I'd like to say that's a picture of me in my younger days, but it's not.

So, as I asked, well, would you start up again after selling? OK, good point, thank you for that. .

Someone there said they'll be in touch, which is good, you know, these are the details on the screen there for that. We do have some practises, who are becoming inveterate setups, so, you probably know Brian Faulkner set up his 4th practise. We've got a vet who's sold out to CVS, worked for them for a year, then went down the road and set up his own new practise.

He's now growing that to a point. The sale, so these are sort of rolling 5 year plans, so ask you the question, knowing what you know now, would you do it differently, and would you do it again? So yeah, there's nothing wrong with that.

Now, if you do it and you've got some money in your pocket, because the first time I set up in practise, I didn't have any money at all. So it was much harder. If I had a couple of million in the bank, I would do it very differently.

And if you love being a vet and love having the autonomy, why not? Why not? I'm doing, I have to say, we bought a bought a practise and doing it a second time around, it is so much easier knowing learning from all the mistakes you made the first time around.

But and it and it entirely depends on you as a person. Again, these few people that have started up again enjoy the creation of a new practise and building it up, but then they'll normally say, oh, I don't want to spend the rest of my life squeezing anal glands. I'm really bored.

I want to sell it and go and start another one up. It's the fun of it's the being an entrepreneur and doing something. So, you know, that doesn't necessarily have to be a veterinary practise, it might be something else that.

That you might go into, but it's a personal answer to that question, would I start up again? I do own a veterinary practise, I've forgotten about it because I never go there. I forgot I actually own a veterinary practise.

Now that's the way to own a veterinary practise as far as I'm concerned. So yes, it is possible if you know what you're doing second time round, so very good. Thank you, Jeff, for the, the, Jeff says excellent webinar.

Helen says that thank you very much, so that's great. That's OK, but if we can help our numbers are on there or email if you want to want to chat about anything, we're more than happy to talk. .

So I'm gonna leave it at that, if there's no questions, . Like I said, it might not be the, the, the place right here. Hopefully that was useful.

Look forward to seeing you all in a month for our next webinar on the practise management theories. Again, a lot of thanks to Saint Francis Group. Thank you very much to, Simply Health and thank you to Eight Legal for supporting this series.

Great that we have that amount of support for practise management in the series, and thank you to Katherine and Webinar vet, and I'll wish you all good night. . Mhm