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Dr. LeeAnn DuMars graduated from Washington State University in 1989 before establishing her Fresno-based general practice, Pet Medical Center & Spa, in 1992. In 2009, Dr. DuMars purchased an additional specialty/ER animal hospital, Fresno Veterinary Specialty & Emergency Center (FVSEC). She shared ownership of the two clinics with her husband, Bob.
Both hospitals had modern facilities and ample space (over 8,000 square feet). Pet Medical Center & Spa employed three DVMs, while FVSEC employed five veterinarians. Additionally, Dr. DuMars owned the real estate at Pet Medical Center & Spa and rented the facility at FVSEC.
Approximately nine months before partnering with Ackerman Group, LeeAnn and her husband took their hospitals to market.
We didn’t set out to sell; rather, we wanted to get a pulse on the market. But once we obtained offers, we couldn’t refuse the money. A pre-planned sale where you exit when you’re ready just seemed like the way to go.
BOB MAYORGA
Throughout their research, LeeAnn and Bob read about the added value of selling your practice through a group; they wanted to learn more and get involved. In a group sale, several unaffiliated practices sell together in a “bundle” to secure a higher price and improved terms. Through their longtime veterinary attorney, the couple met Gary Ackerman, who explained the group process further and discussed his success in the past with group sales. After these conversations, LeeAnn and Bob decided to move forward with Ackerman Group to sell their hospitals.
“Gary also brought other expertise with him that we found beneficial, such as financial planning, estate planning, and building sales… The collection of expertise is what you need when dealing with large practice sales figures.”
DR. LEEANN DUMARS
Veterinary Practice Sale Goals
As a first step, we came together with Dr. DuMars to identify the goals of her and her husband’s practice sale:
The couple hoped to start the planning process by evaluating their profit levels and resulting valuation and to eventually sell their hospitals for maximized value.
They wanted to pursue an exit that led to a smooth transition and potentially included some of their Associates.
LeeAnn and Bob were unaware of transaction features that could give them better terms (think: JV, earnouts). They needed help incorporating these aspects into their sale to increase their value further.
The couple wanted to sell the property at Pet Medical Center & Spa and secure a lease for FVSEC that their buyer would be happy with.
“Another element that sold us on Gary was his hand-holding throughout the initial evaluation process and before, during, and even post-engagement. He was readily available to answer any of our questions.”
BOB MAYORGA
Veterinary Practice Sale Process
Ackerman Group evaluated all relevant information and finances between FVSEC and Pet Medical Center to ready the sale. A joint venture with earnout potential was the best deal structure to pursue with Dr. DuMars’ goals in mind.
As mentioned earlier, Ackerman Group also planned to sell their practices in a group sale. The group sale included nearly 30 practices across the U.S. Gary held an in-person, three-day meeting for all participating practice owners. Corporate buyers also attended to pitch their offers. After the in-person meeting, Gary and his transactional attorney held regular virtual meetings with group members to evaluate proposals, answer any questions, and facilitate discussion to choose the best deal.
The group divided into two smaller groups that sold to two different corporate groups. LeeAnn and Bob’s hospitals were sold in one of the groups to NVA in the form of a joint venture.
“Ackerman Group made the sales process an easy endeavor for us. They handled all the details while we were able to still manage life and businesses sans sales stress.”
BOB MAYORGA
*An important note: Pet Medical Center had low profitability levels upon initial evaluation. With that in mind, Ackerman Group worked on structuring the joint venture (and earnout) around the hospital’s future EBITDA growth rather than its current profitability. After the first sale to NVA, our team identified some financial gaps and operational challenges that were holding back Pet Medical Center’s profitability. LeeAnn and Bob were confident in the future success of the company; the sale structure developed by Gary ensured LeeAnn and Bob profited from their hard work and the future earnings potential of the hospital. We helped LeeAnn and Bob overcome those hurdles to obtain the best possible earnout and highest sale price at the time they fully exited the joint venture.
Outcomes and Results with Ackerman Group
Dr. DuMars and her husband sold 55 percent of FVSEC and 60 percent of Pet Medical Center to NVA while they retained minority stakes in both businesses. Their deal featured:
Note Terms
For both hospitals, NVA offered an optional installment sale over five years which included interest paid quarterly to LeeAnn and Bob. This gave Bob and LeeAnn significant pre-tax income for their retirement.
Staff Involvement
LeeAnn and Bob were able to include one of their key Associates from FVSEC as part of their joint venture structure.
Tag-Along Rights
The couple had tag-along rights to protect their minority shares in the event of NVA selling their portion of ownership. In 2019, that came true when JAB Investors acquired NVA. LeeAnn and Bob sold their shares at the same time as NVA, and at the same share price, essentially “tagging along” with NVA’s sale. As a result, their exiting sale multiple increased by 25 percent from their initial sale multiple.
Earnout Potential
The couple worked with NVA to mutually agree on baseline earnings to achieve after two years. LeeAnn and Bob exceeded those earnings by the minimum established percentage, therefore capturing one-hundred percent of their earnout.
Real Estate
Gary negotiated a long-term lease with NVA to take over for both FVSEC and Pet Medical Center. (Reminder: LeeAnn and Bob still owned the property at Pet Medical) Once the lease was signed with NVA, the couple sold the real estate for Pet Medical at a premium price (due in part to their long-term lease with NVA).
The couple’s employment terms were a minimum of two years. After the initial term, both LeeAnn and Bob decided not to renew their employment with NVA and subsequently sold their remaining portion of ownership for both hospitals.
“By ourselves, we had previously received an offer from NVA that seemed low to us. With the sale, JV earnings, and earnouts achieved, we ended up making 17 million more than that initial offer. I know we hear comments about the commission rate on sales, but look what we achieved with it! We can absolutely state that the commission price was money well invested.”
DR. LEEANN DUMARS
$17
MILLION
Overall increase in value from the initial DIY offer
After selling their hospitals, LeeAnn and Bob fully retired and relocated from California to Florida. With the sale of their practice’s real estate, they swapped their property in a 1031 exchange for multiple rental properties in Florida. Today, they manage those properties and are enjoying retirement.
Fresno Veterinary Specialty & Emergency Center
37%
increase in EBITDA
38%
growth in JV valuation
Pet Medical Center & Spa
728%*
increase in EBITDA
285%
growth in JV valuation
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