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Dr. Joseph Kinnarney graduated from Cornell College of Veterinary Medicine in 1980 before starting his tenure at Reidsville Veterinary Hospital, about 20 miles northeast of Greensboro, North Carolina. He took an ownership role at Reidsville, and over time also started two smaller clinics alongside co-owners for each: Bel-Aire Veterinary Hospital and Mebane Veterinary Hospital. These two smaller clinics were located in different markets: Bel-Aire located in Greensboro proper while Mebane serves a growing community between Greensboro and Chapel Hill. Reidsville was the largest practice of the three practices (its revenues were near twice the amount of Bel-Aire and Mebane’s revenues combined) and the hospital offered general veterinary care, regional urgent care services, surgical services, and theriogenology care. Reidsville Veterinary Hospital employed three to four DVMs while Bel-Aire and Mebane each operated with one to two doctors. Dr. Kinnarney personally owned the real estate at all of the clinics. In terms of facility conditions, all hospitals underwent semi-recent updates; Reidsville is in great condition and the other two are in good shape.
Outside of practice ownership, Dr. Kinnarney remains well-known in the veterinary industry for his many accolades from the North Carolina Veterinary Medical Association and for his involvement in the American Veterinary Medical Association. He served on the House of Delegates, Board of Directors, and multiple leadership positions at AVMA, most notably holding the position of President for the national organization from 2015 to 2016. In 2019, Dr. Kinnarney received the AVMA President’s Award for his positive impact on the profession. He currently serves as Chairman of the Board of AVMA Trust, AVMA Life Trust, and AVMA PLIT Trust as well.
After owning Reidsville Veterinary Hospital for 40 years, and Mebane and Bel-Aire for 20 and 30 years respectively, Dr. Kinnarney found himself extremely busy and wanted more time to dedicate to AVMA and other personal pursuits. Together with his partners, they decided to sell their animal hospitals.
Dr. Kinnarney was referred to Ackerman Group by a fellow veterinarian and practice transitions consultant – he began his engagement with us in August of 2021.
I knew of Gary previously, and I was at a horse show when I spoke with someone who sold their clinic with Ackerman Group. It jogged my memory, and coincidentally, Gary sent me an email about something that lead to us talking numbers if I were to sell. On top of that, people I respected had great things to say about Ackerman Group. Thinking about the overall landscape of practice sales, Ackerman is the leading group. I was realizing, you know, maybe the stars are aligned and it’s time [to sell].
DR. JOSEPH KINNARNEY, DVM
Veterinary Practice Sale Goals
Ackerman Group worked with Dr. Kinnarney to identify the goals of his sale.
Overall, he hoped to reduce his hours spent on business functions at his hospitals so that he could give more attention to other activities inside and outside veterinary medicine. He is a big producer, so buyers expected him to keep working a similar schedule as a producing veterinarian post-closing to what he worked pre-closing.
Dr. Kinnarney wanted his buyer to help the practices with recruiting staff and doctors.
Dr. Kinnarney hoped to achieve “best case scenarios” for his two partners at Bel-Aire and Mebane who each held 50 percent ownership.
Values were extremely important to Dr. Kinnarney and we needed to ensure he and his buyer shared the same vision.
“I’ve been in the banking world for almost 30 years, so I was familiar with the processes [of selling] and was fearful of what I was getting myself into. Ackerman Group made it more seamless than I anticipated.”
DR. JOSEPH KINNARNEY, DVM
Veterinary Practice Sale Process
As a first step, Ackerman Group gathered data on all of Dr. Kinnarney’s hospitals and tried to bring clarity to his financial picture. His financials were complex with other business interests – a private breeding business, equine activities, among others – intermingled with the Reidsville practice financials. Our team spent a significant amount of time sorting out the financial details with him. Given Dr. Kinnarney’s competing interests for time, our team traveled onsite to his practices to collect information and review finances. After extricating hundreds of items from his finances and ensuring correct categorizations of expenses, we could accurately analyze his data and ready his practices for the market.
Initially, we proposed selling Dr. Kinnarney’s three hospitals as part of a group sale. In a group sale, a “bundle” of unaffiliated practices sells together to obtain a higher price and better terms. Ackerman Group secured a buyer for the group, but changes with the consolidator led them to forego the purchase and move in a different direction.
As a result, our team pivoted strategies. Instead, we aimed to sell Dr. Kinnarney’s hospitals sans group sale but all three to the same buyer. He and his practices were in demand: after taking the practices to market again, we solicited five varied offers on all three of the practices.
Many other companies also proposed offers to purchase Reidsville and Reidsville only. If Reidsville Veterinary Hospital sold by itself, it would have attracted even more interest since many buyers put a premium on large hospitals. Regardless, we offered all three hospitals to be sold together (but each with their own valuation). With this “package deal”, we were able to achieve strong valuations for the two smaller clinics that otherwise would not have sold at those prices if purchased individually. We accomplished this without negatively impacting the value of Reidsville.
Additionally, there were certain inherent conflicts between the three unique practices and their different valuations. Our team assisted Dr. Kinnarney and his partners throughout the sale process and LOI negotiations to ensure fairness to all parties.
After careful evaluation and deliberation, Dr. Kinnarney signed his Letter of Intent with Western Veterinary Partners (WVP) to acquire all three of his clinics.
“I chose Western for less money actually. They just philosophically had a component that was compatible to me. You hear stories of other practices [under new ownership] with staff leaving and unhappy teams and drops in performance. I knew that I wanted to enjoy the last three years of my career with a group that would make the practices better.”
DR. JOSEPH KINNARNEY, DVM
Outcomes and Results with Ackerman Group
When all was said and done, Dr. Kinnarney sold Reidsville, Bel-Aire, and Mebane to Western Veterinary Partners in deals that featured a mix of TopCo equity, contingent notes, staff incentives, real estate terms, and more. WVP also viewed Dr. Kinnarney himself as an invaluable asset; he could positively impact their organization by serving as a strong reference for future practice acquisitions.
Here are some of the significant features of Dr. Kinnarney’s practice sale:
- TopCo Equity: WVP paid anywhere from 12 percent to 16 percent of the purchase price in TopCo equity across each of the three hospitals. Dr. Kinnarney and his fellow partners received shares of WVP and thus were more incentivized to increase their practice’s performance to grow their ownership stake’s value in the parent company. Ackerman Group helped the sellers evaluate the TopCo equity from WVP and other suitors to assess the probable upside in each buyer.
- Contingent Notes: WVP paid a portion of the purchase price through contingent notes, which created financial incentives for the sellers and staff based on future performance. Ackerman Group helped negotiate the terms of these notes to ensure the targets were reasonable and realistically achievable.
- Recruiting and Retention: Western Veterinary Partners agreed to allocate hiring resources to all hospitals to help them maintain and grow their business capacity.
- Employment Agreement: All the owners were willing and wanted to continue working for at least a three-year term to ensure continuity at the hospitals and to support WVP’s recruiting of additional DVMs.
- Real Estate: WVP entered into a Triple Net Lease for all three hospitals. For Reidsville, their lease term was 15 years, and for Bel-Aire and Mebane 10 years. All leases had two, five-year renewal options.
Overall, Dr. Kinnarney’s sale, from engagement to closing, lasted approximately 11 months. This period included the time dedicated to pursuing the group sale strategy before pivoting to an individual sale.
“I’ve been with my attorneys, who are a decently sized firm, for 42 years. They said that, of all the deals they put together, they thought Ackerman Group was really a step above and made the process flow easily for them. For them to come out and make that comment is such a compliment to Ackerman Group and its team.”
Dr. Joseph Kinnarney, DVM
Before the first buyer pulled out of the group sale, they had offered an EBITDA multiple of 16x for Reidsville and a lesser mutliple for the smaller hospitals. Despite shifting economic conditions and buyer acquisition multiples dialing back in early 2022, Ackerman Group was able to secure Dr. Kinnarney’s eventual sale for the same purchase price multiple for all three locations.
Today, Dr. Kinnarney still works at Reidsville Veterinary Hospital, but has more flexibility and time for his interests inside and outside of the veterinary profession. He’s a wine connoisseur, world traveler, and an expert breeder in champion-level miniature schnauzers, Scottish terriers, and Arabian horses.
16x
EBITDA Multiple
25%+
Revenue Growth in 2021 Across the Three Locations
22%
EBITDA Margins at Reidsville Veterinary Hospital
18%
EBITDA Margins at both Bel-Aire Veterinary Hospital and Mebane Veterinary Hospital
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