Living in a Consolidating Market
Whether corporately owned or independent, today’s veterinary practitioners need their distributor reps’ solutions, resources and market knowledge.
Consolidation has been an ongoing discussion in our industry for years, and that’s not going to change. There will always be practice owners who have reached the age where they want to slow down, sell their business and move onto the next phase of their lives. The big difference today is the active buyers are primarily consolidators, not associate veterinarians. Data suggests this due to a generational shift that has also affected other markets, including physician and dental practices.
The good news is the corporate consolidators are offering historically high multiples and flexibility in the terms of the transaction, allowing many sellers to cash out in ways they never thought would be possible. In fact, the multiples today are high enough to entice younger practice owners with successful practices to consider selling as well, so they don’t miss the window, which is being driven by easy money, heavy competition among the consolidators and the opportunity in the animal health market.
This doesn’t mean independent practices are going away. There will always be entrepreneurial veterinarians intent on running their own businesses. Many of them have already run the numbers and decided they are better off owning and running the practice, regardless of what they can sell it for later. And contrary to what many tend to believe, a large number of veterinarians are talented businesspeople who have built great businesses. They understand how to provide the best possible care while meeting the expectations of the pet owner.
Many people believe the corporate entities can help the entire veterinary industry by continuing to push to deliver better medicine, implementing best practices, executing more effective marketing campaigns, and developing
more effective ways of meeting the expectations of today’s customer. And in their mission to acquire practices, many have also become focused on creating mentoring programs and a strong culture, which are critical in today’s post-COVID environment.
Independent practices willing to learn and focus on improvement can replicate much of what is being done by consolidators. They have partners, including most distributors, who can supply the technology, tools and expertise to help them stay current and more effectively compete. There are also organizations like Veterinary Study Groups, the Independent Veterinary Practitioners Association and others who have been successful in helping independent practices.
Successful sales reps have generally accepted consolidation, adapted and keep looking forward. No, it isn’t easy seeing a great customer you have helped over the years sell the practice and put the business you have built in play, but that shouldn’t change the commitment you make to your customers. They all need you – and your access to the technology and tools that can help their practices. Positioning yourself as a dependable resource who understands your customer’s business is the best possible way to stay relevant in our changing market. There will always be customers who need you.
Photo credit: istockphoto.com/VectorInspiration
