Arizona’s first pet veterinary centers create ESOP, thwarting industry corporate consolidation trend

GLENDALE, Arizona – (COMMERCIAL THREAD) – In an industry where more than 20% of general veterinary practices and around 70% of specialty practices are now owned by corporate groups, an Arizona veterinary practice is opposing the trend towards consolidation and maintaining its independence via an employee shareholding plan (ESOP). An ESOP is a benefit plan that gives workers a stake in the business.

1st Pet Veterinary Centers, with more than 300 employees providing 24/7 primary and specialty care and emergency services, at three AAHA accredited facilities in Phoenix, Chandler and Mesa, Ariz., Has was founded in 1989 by Randy Spencer, DVM. When Spencer began planning for succession for the thriving business he had run for over three decades, he looked for an alternative to selling a business as an exit strategy.

“It’s all about the legacy – we’ve created a great, caring culture and I didn’t want to lose it to a big company,” Spencer said of his decision to create an ESOP, a process that started three years ago. “I also wanted to reward those who helped develop this practice and provide a good retirement opportunity for long-time employees. ”

Through 1st Pets’ ESOP, all employees 18 years of age or older who have worked at least 1,000 hours per year are eligible to receive shares as part of their compensation. They will be acquired over the next six years. The number of shares that each employee receives depends on their remuneration and their seniority in the company. When the employee retires, he will receive the value of the stock in cash. An independent annual valuation of the company determines the share price.

Although there are approximately 6,500 ESOPs in the United States (Publix Supermarkets is the largest), they are rare in the veterinary industry. Spencer wants to change that by sharing the significant benefits of this approach for veterinary owners and employees.

“Research shows that ESOPs are a viable option for profitable veterinary hospitals with 20 or more employees and offer an exceptionally fair alternative to selling to businesses, including significant tax benefits,” he said. “Additionally, ESOP companies have been shown to have higher growth, sales and productivity than non-ESOP companies. An ESOP can also help attract and retain employees, as employee-owners are more committed to providing the best care and service. I believe there is no better legacy for a successful practice than this.

About Hector Hedgepeth

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