What happens after the sale

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Congratulations! After years of hard work, you are on the verge of achieving equity in your veterinary hospital after recently selling the business. Your beloved veterinary hospital has grown into a multi-million dollar business serving the pet community and their owners for many years. Your business success is the result of a love of the profession, excellent customer service, growth in medical services, innovation, long hours and hard-earned business acumen. This has allowed you, as a veterinary practice owner, to attract the attention of veterinary consolidators. After months of research, haggling and sleepless nights, you come to a mutual agreement on an estimate, and the sale is imminent. You breathe a sigh of relief and plan your retirement.

Although this is a momentous occasion, you have made sure to consider all aspects of selling your beloved veterinary practice. You have consulted your tax advisor on the best model, the optimal time of year and other potential consequences. You may have chosen a full cash, cash and stock sale, or a partial sale to retain some operational control; what happens after the sale can vary depending on the buyer. You are satisfied with the process and set the closing date. The countdown begins.

Selling your veterinary practice while continuing to work there is like selling your house while continuing to live there. The new owners move in, but you don’t move out. The post-sale process can be a relief, but it can also be emotionally and physically draining.

It is at this point that the full reality of no longer owning the business can cause traumatic feelings. Selling veterinarians will often go through stages of grief when handing over their “child” to new guardians. After the sale, a veterinary company typically requires the selling veterinarian to continue working in the practice and participate in a transition period to maintain stability. If a selling DVM leaves abruptly, there can be an exodus of staff and customers that would be devastating for the new owners.

You now move on to the next phase of the sale: onboarding and integration into the new veterinary group. At this point, the closing date and time are set. Until that day, you and other hospital leaders will potentially have increased contact with veterinary group management. You can expect several calls and emails per day. The practice manager will be asked to provide information about the vendor’s account, utilities, and local service contacts. Human Resources will need all staff names, birthdates, tenure information, and accrued vacation to set up payroll for Day 1.

Vendors often don’t let their hospital team know they’re selling until a week or even 24 hours before the sale. They may be concerned about staff leaving or associate vets resigning when informed that their employer is changing, particularly when their new employer is a veterinary company. You need to give your team time to process this change as their information will be provided to the new company. You can do this as a group or in one-on-one meetings to give each employee a chance to ask questions. Prepare for the anguish and worry they will experience. Leading your team into this “new normal” can be complex and requires emotional intelligence, empathy and courage.

When preparing for the onboarding process, ask to speak to previous owners who have sold to this group to learn about their experiences. Ask open-ended questions such as:

  • How was the onboarding process when the hospital team was onboarded?
  • Has the hospital assigned an integration concierge?
  • How was closing day? What was done well and what could have been done better?
  • During the first days and weeks of onboarding, were all your questions and concerns answered in a timely manner? Was it easy to contact someone for help?
  • Has there been a flurry of activity at the hospital for a while?
  • Has the process interrupted the normal flow of business? Was the team inundated with calls from many departments? Did people from the home office show up unannounced?
  • When was the final inventory taken? (This is usually done within 24 hours of closing. If your team is unfamiliar with regular inventory accounting, you need to plan it well.)
  • Was the integration of human resources and payroll processes done in person or electronically? Who trained the team on the new processes?
  • How were employee working hours recorded after the sale? For example, did they use time clocks or practice management software?
  • Have there been any unexpected changes in the agreements made since the sale? (These would include both the “handshake” and written agreements.)
  • Was there a vested interest in keeping your team “whole”? Or were wholesale changes made immediately after the sale?
  • What would you change in the process, from initial contact to negotiation, from closing date to onboarding?
  • Were you satisfied with the transaction and the result?
  • And above all, would you sell to this group?

In addition to the vendors you are directed to, engage others informally. Keep in mind, as with any referral, that you will only be taken to those who speak in positive terms. There is no longer a taboo about selling to a consolidator, so it is essential to ask your colleagues about their experiences with this group. You should also ask to speak to the onboarding team or manager. I hope you have been assigned to a concierge team with a contact person you can ask the following questions:

  • Who can meet the team to answer their questions before the sale? They’ll want to know the perks, if schedules will change, and if reports will change (who’s their “boss” now?). Doctors will have concerns about drug supplies, their schedules, contracts, etc. These questions must be answered thoughtfully, honestly and fully.
  • How are bank changes handled? A critical transition must occur for all deposits at the time of sale. Even if it happens in the middle of the day, credit card machines should be changed to send all earnings to a new bank account at that time. If the seller continues to receive funds in their bank account, these funds will need to be transferred, which can create headaches.
  • What is the process for bank deposits after the sale? Is the firm manager required to make deposits with a certain frequency? How is it audited?
  • Who will handle the switching of accounts? Seller accounts under the seller must be closed and new accounts opened for the time of sale so that the new owner is immediately billed for all orders and invoices. This applies to external reference laboratory services, utilities, payroll, maintenance services, etc.
  • If branding is to take place, when and how will the name change and notice of new owners become public? When will the new signage be erected and the website modified?
  • Will staff immediately receive new uniforms?
  • When are staff eligible for benefits and what is the enrollment process?
  • What are the expectations for interaction with corporate headquarters and regional managers?
  • What policies and processes will change? Is there a team member manual for HR processes?
  • How are financial benchmarks, targets and budgets established?

Many veterinary groups have formed special onboarding/integration teams that guide newly purchased hospitals through this process. An onboarding team should consist of a veterinarian as well as a non-DVM manager, and both should be experts in change management.1 Many groups still struggle with this process due to lack of staff, knowledge, experience, skills, and most importantly, emotional intelligence. A clearly defined written process should be shared with the seller prior to closing. Planning is one of the 6 strategies for coping with change,2 and hundreds of tasks need to be done during closing and onboarding. Well-run veterinary groups have an intentionally organized onboarding process to set a positive tone for the working relationship going forward. Otherwise, a poorly executed integration can lead to frustration, anger, regret, malicious behavior, dissent, and attrition. A superbly executed process will help staff to be curious, open, insightful and helpful. Incorporating this process from the start will help everyone be less anxious about other impending changes.3

Although most salespeople continue to work, they may step back from their leadership role and reduce their hours soon after the sale. However, during the onboarding phase, staff need to know that you are fully engaged with them. They need to know that you are confident in your decision to sell and they need to see how it will benefit them. It is a complicated process, both transactional and emotionally charged. Senses are heightened and hedgehogs will be in place, and staff may feel left out and blinded by the change.

The onboarding process is particularly important when the new owner is a veterinary aggregator. The negative connotation associated with veterinary aggregators necessitates an overabundance of caution and post-closure care. As a salesperson, it’s important to be there for your team during this time; however, the veterinary group must provide a scrupulous and conscientious approach to integration. The life of the practice depends on it.

References

  1. The ultimate guide to the post-merger (M&A) integration process. DealRoom. Updated June 8, 2022. Accessed June 2, 2022. https://dealroom.net/faq/post-merger-and-acquisition-ma-integration-process
  2. Wisdom K. 6 strategies for coping with change. Henry Ford Health. May 24, 2017. Accessed June 2, 2022. https://www.henryford.com/blog/2017/05/coping-with-change
  3. Trevisani E. 4 tips for a successful merger integration. Business talent group. Accessed June 2, 2022. https://resources.businesstalentgroup.com/btg-blog/4-tips-successful-merger-integration

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