Setting Up a Successful Sale

April 2024 |

Why Dr. Gary Levy sold his practice to an associate, rejecting multiple corporate offers along the way—and keeping the practice independent.

Gary Levy, DVM, DABVP (Canine/Feline), has spent 50 years at Lakeview Veterinary Hospital in New Orleans, La., and has been the owner since 2008.

So when he started thinking about retirement a decade ago, Levy knew he had to find the right person to take over. “I wanted someone who really cared about the work they did and who wanted to foster lasting relationships with clients,” he says. “It’s not always about the bottom line. It’s about how they treat people and how willing they are to go the extra mile.”

Levy received steady and persistent offers from corporate entities, but he didn’t think corporate ownership could come close to maintaining the culture he and his team had developed.

A Blooming Partnership

Enter Clare Guichard, MVET SCI, BVM&S, who joined the practice as a new graduate in 2011. When Levy asked Guichard whether she was interested in pursuing ownership, she didn’t hesitate. “I don’t know of any other practice owner who could turn down so many offers,” she says. “He could have made so much more money, and the rest of us would have been so miserable.”

Levy was confident in his associate’s strengths. “Clare has consistently shown growth, patience and a willingness to learn,” he says. “She checks all the boxes—she’s got the right attitude and the medical knowledge, and she’s quickly developing the ownership skills.”

Making It Official

In 2017, the partnership became official, with Guichard purchasing 24% of the practice shares through a loan financed by the local bank where Lakeview has an account. In 2021 she purchased another 24%.

Despite owning the majority of practice shares, Levy operates as though he and Guichard are 50-50 partners, and he has done so since the beginning. As his mentor did for him, Levy is reducing his practice presence gradually. “Transitioning out slowly lets clients realize that I’m winding down and allows them to foster new relationships with the other doctors in the practice,” Levy says. “It also gives me more time to mentor Clare.”

As for how Guichard is paid as a minority owner, “It’s complicated,” she says. Lakeview operates as an S Corporation, so she receives the same salary as the other practice associates (22% of production). As part owner, Guichard also receives 48% of the profits, which are calculated quarterly. “We look at what’s in the bank [each quarter] as well as our expenses and payroll, then estimate how much extra there is that could be taken as dividends,” she says. Finally, she receives an additional management stipend in each paycheck.

Lean on Experts

Although during the buy-in Levy relied in part on his own practice-buying experience, he believes that it benefits both parties to consult experts. “We sought legal and accounting advice as to how to structure the purchase so neither party could be left vulnerable,” he says. For example, Levy was barred from selling to a corporate entity without first consulting Guichard once she owned 24% of the practice, and Guichard must share profits with Levy if she decides to sell to corporate within a certain number of years after the sale is final. Similarly, neither owner can bring in a new partner without consulting the other.

Levy also recommends developing a good relationship with a local bank. “When they’re the banker for the hospital, they already see the value of your business, so it behooves them to be good lenders and good bankers not only to you but to your associates as well,” he says.

Valuation experts are also a must, says Levy, whose previous buyouts were timed. “Because we were four owners, the buy-sell agreements were written such that the leaving doctor would be paid with a fair interest rate and note over 10 years,” he says. “Regular valuations meant that we knew within a range what the practice was worth, and that helped us plan and budget accordingly.”

The most recent valuation at Lakeview, completed in 2019, was $1.7 million. In 2025, the process will be repeated and Guichard will buy the remaining 52% of shares.

Working Together

Clare’s positive effect on the practice’s bottom line can’t be denied. With Levy’s blessing, she brought exotics to the practice as a new revenue steam, hired additional certified technicians as well as Lakeview’s first certified veterinary practice manager, and phased out the offer of certain free services, all of which have helped increased the practice’s annual gross income from $4 million in 2021 to $4.2 million in 2022. Lakeview’s annual profitability percentage, including owner compensation, is 23%.

Guichard also introduced her husband, Ross Goldman, BVM&S, to the practice several years ago when he filled in during her maternity leave. “We never intended to work together, but Ross was a great fit with the team and clients, and he enabled us to offer orthopedic and laparoscopic surgery,” Guichard says. The income from these specialized services exceeded revenue from the practice’s 100-cage boarding kennel, which the partners decided to close.

Sharing the Love

Once Guichard is sole owner, she intends to bring her husband on as a partner. (Levy and Guichard agreed that selling to Guichard alone was best because it avoided any possible divorce-related disagreements.) She is also open to adding more partners down the road. “If there’s another associate who wants to put their heart and soul into this practice,” she says, “then we’ll welcome them with open arms and give it five years to see how it fits.”

In the end, Guichard doesn’t want to lose sight of the practice’s goal, which is to remain a tightknit team that provides excellent veterinary care and top-notch client service. “Business is business,” she says, “but if you can offer a workplace where people feel valued and happy, their attitude trickles down to everyone who walks through the door, ultimately making your practice more successful in so many ways.”