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March 1, 2023

Emmitt Nantz Reveals M&A Buyer Strategies You Should Know But Probably Don't (#208)

Emmitt Nantz Reveals M&A Buyer Strategies You Should Know But Probably Don't (#208)

“It's not about me, it's about us.” - Emmitt Nantz

Emmitt Nantz has been part of the veterinary family for nearly two decades and is driven by a personal mission to make the veterinary domain better. Emmitt spent 12 years working at Banfield starting out as a single-site hospital manager. Having majored in agriculture management and business, he expanded his education to include an MBA, a Black Belt in Six Sigma and a Project Management Certification. Emmitt applied these learnings by creating large-scale operational improvements for the entire Banfield network with a focus on improving employee and client satisfaction. He is now the Chief Operating Officer at Galaxy Vets, a veterinary healthcare system co-owned by its employees.

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Enjoy the interview!


[00:00:00] Jeffrey Feldberg: Welcome to the Deep Wealth Podcast where you learn how to extract your business and personal Deep Wealth.

I'm your host Jeffrey Feldberg.

This podcast is brought to you by Deep Wealth and the 90-day Deep Wealth Experience.

When it comes to your business deep wealth, your exit or liquidity event is the most important financial decision of your life.

But unfortunately, up to 90% of liquidity events fail. Think about all that time and your hard earned money wasted.

Of the quote unquote "successful" liquidity events, most business owners leave 50% to over 100% of the deal value in the buyer's pocket and don't even know it.

I should know. I said "no" to a seven-figure offer. And "yes" to mastering the art and the science of a liquidity event. Two years later, I said "yes" to a different buyer with a nine figure deal.

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After all, how can you master something you've never done before?

Let the 90-day Deep Wealth Experience and the 9-step roadmap of preparation help you capture the best deal instead of any deal.

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Emmitt Nantz has been part of the veterinary family for nearly two decades and is driven by a personal mission to make the veterinary dominion better.

Emmitt spent 12 years working at Banfield, starting out as a single-site hospital manager. Having majored in agricultural management and business, he expanded his education to include an MBA, a Black Belt in Six Sigma, and a Project Management Certificate. Emmitt applies these learnings by creating large-scale operational improvements for the entire Banfield network with a focus on improving employee and client satisfaction. He is now the Chief Operating Officer at Galaxy Vets, a veterinary healthcare system co-owned by its employees.

 Welcome to the Deep Wealth Podcast, and for starters, you expect nothing lessened excellence from us in terms of our guests and in terms of our episodes. Guess what? We are going to not only meet but exceed your expectations today because we have a very special episode.

We have a buyer in the house, folks. We have a bona fide buyer in the house. He's not just a buyer. He has all kinds of experience. You heard that in the official introduction. We've just been talking offline, and I'm really excited because we're going into an area that for a lot of business owners, you don't hear a lot about an ESOP, an employee stock ownership plan.

But I'm gonna stop there. I'm not gonna take the wind out of your sales Emmit. So it's so nice to have you on the Deep Wealth Podcast. Why don't we start with this, Emmitt? There's always a story behind the story. So what's your story? What got you to where you are today?

[00:03:08] Emmitt Nantz: Yeah, appreciate the having me on the podcast, Jeff. This is gonna be a lot of fun. I've been in this veterinary space for about 20 years, and that's where I focus. That's where my passion is. I actually bring a lot of passion for the human beings within this space, and it drives most of what I do. So I started by working in a veterinary hospital and managing it did that fairly successfully, and it was for a large group.

And I worked into their corporate headquarters and started doing reporting and analysis. Then I also did large-scale process improvement projects, but I was always motivated by the idea of how could we do things a bit better. But the root of that is, you can do a lot of different businesses, but it's really tough to find a group of people that know their why.

Like veterinary professionals, they gain into this space because they have a passion for the pets that they treat, the pets that they wanna take care of. And oftentimes they could use some assistance when it comes to helping make that process work better, feel better. So a lot of my motivation has always been my talents as MBA, Lean Six Sigma, other kinds of qualifications.

There is really a process improvement. And how can I help them get more joy out of what they do and do it more successfully? So I find myself right now as the COO of Galaxy Vets, after quite a trip working in software, working in hospitals, working for large groups, and our mission here is to bring veterinary medicine back to veterinarians.

The idea there is to put the passion back into the business and really set an example for the rest of the industry to follow with a lot of advantages for success.

[00:04:27] Jeffrey Feldberg: Terrific. And let me put a pause there for just a moment, Emmitt. And for our listeners, obviously, if you're a veterinarian, stop what you're doing. If you're driving, pull over to the side of the road, you're gonna wanna really listen to what's going on. You're gonna get an inside track. And for our listeners who are saying you know what?

Emmitt, you seem like a nice guy. And Jeffrey, likewise, but I'm not really a vet. Why would I care about this? I want you to still listen because you're going to hear from the trenches how Emmitt looks at businesses. What he sees that he likes, what he sees that he doesn't like. And yes, Emmitt's gonna be talking specifically about vet businesses, that they're folding into their mix.

But best practices or best practices, and I don't know if this term exists, worst practices or worst practices, and we wanna be on the side of best. Practices. So here you have a very experienced buyer who's gonna be sharing things with us that you're gonna want to hear. So let's start at the basics. I mean, you can do this in your sleep, but let me ask the question anyways.

So an ESOP, an employee stock ownership plan, what the heck is that, What's it all about?

[00:05:29] Emmitt Nantz: Yeah. Great. So employee stock ownership plan is really the key design of Galaxy. That's, it's a bit of unique model, especially in the veterinary space. But employee stock ownership program is a qualified program. Much like a 401k that most people are familiar with. So it's pre-tax value creation. That can be more of a retirement planning and actually, an ESOP value can be rolled into a 401k for individual owners.

But employee stock ownership and an ESOP is exactly as it sounds. It's the ownership of stock by all the employees in the organization. And that's how we've set this up. Everybody that participates in the Galaxy Vets Organization will have ownership. In the organization, we see this as a huge advantage because there's a number of things within the veterinary space, a lot of consolidation, a lot of private equity held consolidated ownership that is looking for a three to five-year turnaround.

But what we're finding over a period of time is that's really wearing out the teams and we're seeing a strong extraction of talent from the industry. They're feeling burnt out and they're just walking away. An employee stock ownership program gives us the ability to attract top talent and give them the ability to participate not only in their own wealth creation but to participate in how we do what we do.

That's a passion that everybody shares within this Veterinary industry. So an employee stock ownership program really is just that everybody has a piece of the pie and they can create wealth by partnering with their peers.

[00:06:49] Jeffrey Feldberg: Okay, Emmit let's do something a little bit interesting here because we're gonna do a dual track here, and I know there is a method to the madness. I know it sounds crazy but hear me out. So for our listeners out there who aren't vets, I'm gonna be asking Emmitt a question that regardless of whether you're a vet or not, it's going to apply to your industry.

Yes. Again, Emmitt's gonna be very specific about vets and what they're doing, and all your veterinarians out there who are listening, please listen up because this affects you. But Emmitt, I imagine, whether it's a veterinarian that obviously you're focusing on, or if it was another industry, I'm sure people who are listening to the Deep Wealth Podcast, they've gotten a call from a group who's saying, Hey, we have a platform business that we already own. We'd like to add your business into the fold, and you'll become part of this group, and we're gonna take you out to market and you're gonna retire wealthy.

And on and on they go with all these different things. And it's a little bit of a different model. Then what you're talking about with your ESOP, and again, whether you're a veterinarian, whether you're a SAAS-based company, whether you have an HVAC company, anything in between, the best practices and the similarities that go amongst the different industries are gonna be the same.

So for the, I'll call it the roll-up scenario, compared to the ESOP scenario, you've chosen the ESOP. There's a specific reason why you started to allude to that. Why don't you walk us down the path of why the roll-up type of scenario is just something that isn't working and you've obviously shied away from?

[00:08:15] Emmitt Nantz: Yeah, no, that's a great point. And it does apply to all types of businesses. When you look at the roll up most of the time your opportunity is to, to Exit to a buyer and your team. When you announce it to the team, you say, Hey, I found you a great home. Have a good life type of a thing. What we're finding is a lot of sellers their team to participate.

They want an opportunity to say thank you for helping me get here. But also within my experience, we're finding sellers that want to continue to participate. They've done the most that they can. When you own your own business, you know a little bit about everything, and you work really, really hard just to keep the lights on and keep it moving forward. When you start, you know, the advantage of partnering with the group or consolidating your business with others is you start to get access to developing economies of scale.

You get to other people within the team that can start to take on the payroll and vendor management and other things like that. So you get those advantages. So a lot of those that we're talking to, they're not ready to Exit. They wanna take advantage of the Wealth and the value that they've created and they wanna share with their team.

Now, this applies to everybody that's looking to sell their business into a larger group like this. So an employee stock ownership program gives this ability to allow them to have an Exit event, continue to participate post Exit, and start to share future value with their employees. So I think that applies to a lot of folks.

[00:09:31] Jeffrey Feldberg: Absolutely. And so if I read into this with what you're saying, it's interesting, you know, I suppose there's always a business owner, and again, no judgment here with what I'm gonna say. There's always a business owner who says, you know what? I don't care about my legacy. I don't care about my clients. I don't really care about my team.

 I want top dollar and that's it. I'm gonna write off into the sunset and I'm gonna have my pina colada on some beach and I'm done. And best of luck to everyone. What's gonna be is gonna be, and that really sounds like in the roll-up kind of scenario, potentially. Unless the right buyer is selected or the right investor, that's gonna be what's happening.

But for the business owner with what I'm hearing you say, so for the vet in this case, you're saying, you know what, I don't wanna retire yet, but I wanna have a little bit more assurance of where I'm gonna be, and I'm tired of floating the business and writing the check all the time and the pressure that goes along with that.

And I wouldn't mind getting a few more resources. Maybe in HR or payroll or paying different things that I can get some help that I just really wanna show up to my clinic. I wanna enjoy, go back to what I got into the business for the first place, and know that I have a professional team around me who's gonna help perhaps even make my retirement even wealthier for me than what it would be otherwise.

Am I off base with any of that?

[00:10:43] Emmitt Nantz: No, you're absolutely spot on cuz the way I look at it, they're able to take advantage of what they've done. But oftentimes they've maximized what they can do. They're usually an owner and producer, so they're on the floor and they're trying to run their business so they can take advantage of the value that they've created.

But in an ESOP, they're able to roll over and continue to grow. So where they've hit their ceiling, now they can start to take advantage of. The advantages of a larger group. Now, I'm not sure of all other industries, but within the veterinary space, there's quite a difference in the arbitrage opportunity.

So simply by rolling your hospital into a larger group of hospitals where you might get 10 to 15 times your EBITDA, the group can sell 20 to 25 times EBITDA. So when you take a, just by rolling that together and you continue to participate as an employee within the ESOP, you get advantage of the future value there.

But you're also getting economies a scale, and so you got buying power and other types of things that come into a group environment that increases the EBITDA opportunity just within each single location. So you get to participate in that too. So to your point, someone who's selling, even if they're like, I could walk away, I could step back, if they stick into it and continue to work with the group, there's a lot more upside than as an individual.

[00:11:53] Jeffrey Feldberg: And Emmitt, what you said is so crucial, and for our listeners, I hope you picked up on it because it's that so many business owners overlook, and it's all about scale. So as an example, Emmitt, and tell me if I'm off base with any of this, if you had two businesses, let's forget about the revenues for just a second.

The percentages of the businesses were identical. So the gross profit, the net profit, all those percentages were exactly the same, but one business was larger. Let's say it was double digits in the millions and the first business was single digits in the millions. Even though they're both the same percentages, the second business that's double digits in the millions for revenue is gonna get a higher valuation than the first business.

And so you're talking about that and how an ESOP really brings that to the table. Can you expand upon that for listeners of how that's, you know, the mechanism, how that's happening behind the scenes of what's going on with that?

[00:12:46] Emmitt Nantz: So the opportunity to bring groups together are hospitals together in my space. There's a few advantages. One, you're gonna take a lot of the overhead. This applies to most any industry. When you consolidate small businesses, you're able to share the overhead costs.

Those things, just the general effort to keep the lights on, keep people paid, move it forward. You can spread those costs across. So that makes it more valuable that way. But you also get the opportunity to share experiences. So when you're operating your own location, you're trying to figure things out and learn on your own and then apply those things.

But when you start to bring groups together, you can share in peer experience, but you also then get the overhead component of a leadership team and a management team that can bring experiences from their past as well as share those experiences that are going on. So that gives some cross-pollination for growth side.

So your top-line improvements. But then within the cost component of things, within our space, cost of goods, our cost of inventory is one of the big drivers of expense. As you consolidate groups or hospitals together, you get buying power. So you get the opportunity to negotiate vendor relations and decrease the unit costs of those things that are replenished across the whole network.

So that's a, gonna increase your margin capability, increase your performance there. The other big driver is labor expense. But oftentimes an individual practice has that labor expense plus the benefits, and they find it's, find it hard to compete. When you start to pull those resources together, you can get, negotiate better prices with benefits suppliers and you can start to cross-pollinate talent across multiple hospitals as well.

So you start to get those types of advantages working together in a group well to a future seller that's looking to buy the group, that's much more valuable because they don't have to recreate that, they don't have to put that together. It's existing. And really what's going to the bottom line energy, EBITDA line is far better.

So where you might be able to run 15 to 18% EBITDA as a single location, it's not farfetched to get to 22 to 25% EBITDA. Simply some of that arbitrage experience there.

[00:14:40] Jeffrey Feldberg: So, we're gonna talk in a moment about what Galaxy Vets brings to the table for me as an owner of a hospital who's now being rolled up into your group. But let's talk about what you're not doing. And this is in the trenches kinds of things that we only hear here around the Deep Wealth podcast. So I would imagine Emmitt, without naming names, obviously, and keeping the privacy there and respecting that, I suspect you've looked at different hospitals, different practices.

And as much as you wanna add groups to the mix, you're walking away. What causes you as an experienced buyer, you have an eye for this, and this is what you do day in, day out. What's causing you to walk away? What would be some practices exhibited by that current donor that's having to say, You know what, Thank you, but no thank you?

[00:15:26] Emmitt Nantz: Yeah. Number one, Jeffries, just visibility. The data's gotta be clean and at least able to be understood. That's the first and foremost. So having good reporting and financials, just so we can ask some questions and understand what's going on, you go a little deeper into that making sure that you can explain and understand what's going on.

So some of the things that we will see is owners taking large salaries, that can't be carried through. That's one example because then how do we rectify that post-acquisition? And maintain that. The flip side of that is owners not taking any salaries and they're only taking draws. How are we gonna correct for that?

Because that works, just as that example is they're not taking any salaries, then that's inflating the EBITDA buyers are going to then pay multiples on that inflated EBITDA, but then not have the return post-acquisition. So that has to be rectified. Another key opportunity there is rent. Make sure that you're paying for and recognizing market-rate rents for the same concept.

If you're undervaluing that yourself and then taking it out as a draw, but then you're gonna inflate that rent if you own the property. Also throwing the EBITDA calculations off and therefore multiples associated with that. So those are a couple things to really look, make sure your books are clean or clean enough that you can at least understand and explain what's going on.

So questions can be answered. Kind of along the same lines, when you're looking at the revenue side, the top line of your P and L, your profit loss. Making sure you understand how that's being generated and where the opportunities or the pitfalls might be. Something I recommend to sellers before they go into a conversation with the buyer is to make sure you get the advantage of the opportunities within the P and L.

Do you have opportunity to drive revenue? So within the veterinary space, that's generally broken down to how many patients do you see? What's the average transaction per patient, and what are your over-the-counter sales? So if you have an opportunity to see more patients or you have an opportunity to optimize your pricing, for example, those are things you'll wanna do ahead of going to a buyer, making sure you get the best that you can within that business.

Cause that's attractive to a buyer. You've already solved those problems. We have to come in, we don't have to come in to try to solve for those. On the flip side of that, P and L is the expenses. Are you doing the best you can on your cost of goods? Are you managing your labor appropriately? When I talk about labor, something that's really important there too, is you don't wanna minimize it.

You never wanna minimize any of your costs because that's actually constricting your ability to generate revenue. But you wanna make sure you're optimized. You're not over labored and you're not wasting a bunch of inventory. Because those things are excess costs that are also decreasing your EBITDA.

So those are just some things that I suggest true up your own business. Give it a little bit of a run rate, six months minimum. I usually suggest to show that it's on the right path and you've done the best you can. That's something that's attractive to acquire. And then it'll roll right into a group versus having to be corrected post-acquisition.

[00:18:02] Jeffrey Feldberg: You know what, Emmitt, for our listeners who have been through the 90-day Deep Wealth experience, I gotta promise them that Emmitt and I have never spoken before today because what he said is right out of our playbook of step number three, future buyer, how to think and act like a future buyer that's really gonna have them excited and happy and putting a higher value on the business.

And if I go back to the first point, you know, we call those EBITDA adjustments and you're so spot on essentially for our listeners, Emmitt what you're saying is run your business like a business. So don't take a salary that's way out there and above what would be considered market, but also don't be below market.

You wanna show up to your future buyer. In this case, Emmitt saying, Okay, here's the business whether I'm in it, I'm not in it. Our revenues, our optimized, our expenses are normal. I'm not putting the family vacation through the business. I'm not pitching in. We're not understaffed. If I wasn't here, if you were to run this business, it'd be exactly the same with or to help me.

And that's really what Emmitt is looking for. He's saying six months minimum. Run it like that for all your adjustments ahead of time. I would think Emmitt obviously, the longer the better. It gives you more of a comfort level if you saw one year, two years, three years of all these adjustments being done more for you.

So there you have it from an experienced buyer in the trenches, don't play the games they see right through it. They do this all day long and it only hurts you when it comes to the value of your business and the negotiation process. Let's flip it now for just a moment. And we talked about this earlier.

I mean, On the one hand, we have two different parties. They're solving different problems for each other. So for your clients, for the owners of the hospitals, the veterinarians Emmitt, you're solving the problem of removing their headaches of a wealthier retirement and just having more fun back in the business.

Perhaps they lost along the way, and I imagine that for their part, They're going to help you grow as a company, increase your revenues, increase your value, so you have more options down the road. But let's go a deep dive into the trenches now. So when someone becomes part of Galaxy Vets, what are you bringing to the table for them?

That they're saying to themselves, I should have done this years ago.

[00:20:13] Emmitt Nantz: Yeah, excellent question. I can get a little bit passionate about this. This is my forte. So my background I mentioned a little bit is really it's operations, it's managing hospitals. It's not medicine, it's coming to the table as a partner with medical experts. Our veterinarians and our technicians, they go to school for this.

They know their medicine really well. So I compliment it. But here's a few things that I bring to the table that others should really consider. I leverage a lot, Kanban and Theory of Constraints, two methodologies that are really around process improvement, but they're fairly simple. You don't have to become an expert in these things.

The basics of it is map out a process, find the bottleneck, and improve the bottleneck. So you can do all kinds of things within any business, and you can understand where there's a constraint in the system that's restricting its ability to perform better. So that's the kind of step that we generally will bring to hospitals to help them expand their capacity.

That might be service offerings outside of the four walls that might be improvements within the four walls. But just how can you continue to expand your top line and manage your expenses such that your business grows? So thinking that way is something I really encourage folks to do.

[00:21:18] Jeffrey Feldberg: And really what it sounds like here, and you haven't quite said it this way, but it's certainly resonating very much with what I'm hearing and that is, you know, for so many business owners, particularly a veterinarian, I imagine they got into the business not necessarily to be. In business for business' sake, they have a passion for what they do and for better, a lot of times for worse.

There's a whole business component. And so really you're bringing in a professional management team and just a different way of looking at things of how you can make things more efficient. You're gonna be having better access to supplies and what you can buy them for, and all those economies of scale that come into play.

So, more times in au. When you speak with the hospital owners who are now part of Galaxy Vets, what are some of the comments that you're hearing from them now that they're part of the ESOP and that you've come in, you've taken some of those pressures off of them? How has that changed for them?

What does that look like?

[00:22:14] Emmitt Nantz: Yeah, well you kind of started to talk to it a little bit before they get into this because of a passion. So they're really pursuing their passion and they become, it transforms it. I have to manage the business. All my time goes to manage the business and they have to pick up all the pieces.

The first thing that owners are gonna really feel. Cuz most of the time these owners are selling doctors in my profession and they get back into what they do. So they'll feel that pressure and that relief. But the other big one that we start to hear is the ability to develop their team and develop themselves. Cuz most of the time, an owner of an individual business has learned on the fly.

So they've figured it out. Trial and error. I've gone to some classes, tried to figure out how to apply it, but when you start to bring in a management team and other peers of hospitals, you get that ability to develop yourself.

On that next iteration of your own personal development, your professional development, cuz a lot of that overhead stuff has been taken care of for you.

Someone else is thinking that. And honestly the great things is that a management team consists of people who are passionate about those things. That you ended up having to do.

They're good at it and they're gonna do it even better. So it's gonna free you up with that space. And then that third piece is what you talked about already, but in an ESOP organization, you're now able to contribute your professional skills that you went to school for to create a higher outcome. So you're contributing to your own Wealth as well as that of your peers versus just carrying it all on your shoulders.

[00:23:32] Jeffrey Feldberg: And I'm wondering, I mean, we hear so much today post-pandemic. First, you had the great resignation and then the great return, and now the quiet quitting that's going on but you know regardless of what you wanna call it. And I don't think it's so great. I don't know why they call it great, but regardless of what you wanna call it, finding and keeping employees, adding to your team is a big issue, and I would imagine that an ESOP for the employees, for the team members, what a game changer that must be for them.

Can you talk with us of the advantages from an employee's perspective of how that affects them and why it makes someone who's now in the Galaxy Vets ESOP more attractive for the team for an employee?

[00:24:15] Emmitt Nantz: Yeah, I appreciate but the opportunity to speak to that event. The traditional model of consolidation within the veterinary space has been over going over 15, 20 years. is that it's primarily private equity and executive management owned.

They're generally looking at a three to five-year horizon for a turnaround. And so the primary focus really comes to increasing or maintaining that EBITDA to take advantage of the arbitrage, which is just the increased multiples of selling the group.

What we're seeing in our space is that's really drive and burnout, these professionals are delivering those outcomes, but they're not being able to take advantage of it, so they're not investing in themselves.

So a lot of professionals are leaving the veterinary space, which is very similar to what you talk about and everything else. The quiet, quitting, the great resignation, those types of things. People are starting to say, Wait, what about me? What's in it for me, and what's my motivation? Honestly, I think the pandemic gave everybody an opportunity to stop and think a little bit about what do I want my life to be like. I have an opportunity to live my best life.

 The ESOP helps really address a lot of those things. What's happened in the veterinary space is demand, during the pandemic, where veterinary services went up, people are staying home, they have more pets, they're with their pets more. There's a lot more attention given demand for our services went up, but this consolidation has actually decreased the supply of professional services. As people leave and they burn out, the ESOP allows us that opportunity to bring people back in, participate in the design of the company, and participate in the Wealth creation of this company.

[00:25:43] Jeffrey Feldberg: And Emmitt, I would imagine, is the old saying. What gets measured is what gets done. And for an employee who doesn't have a stake in the game, they've got no skin in the game, they don't own the business, they just get a paycheck. That's it. Again, no. Judgment. No aspersions against them. They're just showing up, and they're leaving.

What have you seen in your experience, maybe not in all cases, but I would imagine it does change how quote-unquote employees now operate in the business. Are they taking more of an active role? Are they becoming more involved in different initiatives to have maybe more efficiencies, higher revenues, more profits?

I mean, what do you see because of the ESOP?

[00:26:21] Emmitt Nantz: Yeah, so we're gonna use similar metrics as any other organizations going to use as far as our performance metrics, but to your point, the buy-in is gonna be quite a bit different. When you're not a member of the organization, you're not a stockholder in the organization, you're working for your paycheck. Really about punching the clock, getting your time in. And doing what needs to be done, though you've got a variety of different participation there from doing what needs to be done to doing what you can and want to do. But within an ESOP, what it really allows is bottom-up design. So that's what we're really trying to take advantage of at Galaxy Vets, is that opportunity to say, Look, we all have the same desired outcome.

I'm not asking you to do something to make me wealthy. I'm asking you to do something in participation with everybody else so that we can all become wealthier. And that is a huge motivation. And so that allows us to take ideas to the front lines and say, this is the problem. How should we solve it? Get creative.

So we've put into to place idea portals and certain processes and other opportunities to take those ideas and enable people to generate solutions for those ideas. That's gonna improve the entire organization. So we try to stay away from top down, forced change and say, Let us help you figure out a way to solve this.

And everybody participates. That's where we're seeing the most benefit from something like this. Everybody's run in the same direction.

[00:27:33] Jeffrey Feldberg: You know what's nice about this, and ESOP plays so, so well into this. There's a saying in the M&A industry when the team works, the dream works.

[00:27:42] Emmitt Nantz: Absolutely.

[00:27:43] Jeffrey Feldberg: And so you now have your employees. I'm thinking of myself now. If I'm the owner of the hospital, I'm now part of Galaxy Vets. We're all part of the esop. Talk about a legacy, talk about a gift for the employees that in real time together now as a team, we're all on the same page.

We're all motivated. To do the right things for the business, do the right things for our patients, create that win, win all the way around, and really make that difference. So I'm wondering, Emmitt, as Galaxy Vets has gone out there in the veterinary industry, what was it like before you came on the scene and how has it changed now because of what you're doing with the ESOP?

[00:28:17] Emmitt Nantz: Sure. Some of this is anticipated because we've still got fairly early start. But we're already seeing quite a bit of response within the space, and that's really one of our main objectives. I'll just back up real quick. Dr. Ivan. Zach is the CEO who has started this, and I, as the CEO, I've been in the space for 20 years.

We both have a common passion for the people, so we tired of seeing what was happening. We know we could do this differently. We want Galaxy Vets to be successful, but one of the success criteria is that Galaxy Vets influences the veterinary space. Recognize the talent, recognize the effort that goes into making a veterinary hospital successful and making a group successful.

So The ESOP allows us to align those things as well. And so the ESOP also gives us the ability to, as we've talked quite a bit about, is to pull everybody together, put them on the same page with the same desired outcome. And honestly, within the veterinary space, it's about living your passion. So that's why I was talking, Ivan and I have brought our own passions to this.

We recognize the passion that people treating Pet Springs to this, and it just gives everybody that opportunity to do what they love to do. And honestly, the outcome is increased improvement increased performance. So ESOPs traditionally actually outperform non-ESOP type companies by 6 to 8%. So by having everybody work consistently, they're able to show those outcomes, and we think that we'll be able to influence the entire industry because we'll have those that improved performance.

But one of the biggest opportunities there is to attract talent back into the profession. They're leaving in droves. They're really frustrated. We believe an ESOP structure gives us the ability to attract that talent back in so they can live their purpose and live their passion. And that's just gonna show the industry that that's a much better model than using the folks within the hospital for a few people to become really wealthy.

So that's our mission. That's what we're really trying to drive for. And we're already starting to see others participate in ownership in different ways that they had before.

[00:30:09] Jeffrey Feldberg: What's interesting, I, and by the way, we've had Ivan on the podcast, and Galaxy Vets is a friend of the Deep Wealth community, and we'll put some links in the show notes to that one. And it's great to see that Galaxy Vets has expanded and they brought you on board to get the word out there and evangelize even more.

One of the big takeaways that I'm hearing from you, though, and we spoke a little bit about this, In addition to the employees who now have a motivated interest in the business for the founder, I would imagine that it's fine again, because that old saying, probably before Galaxy Vets, they were working in the business and doing things either they didn't enjoy or if were really open about it, they probably shouldn't have been doing in the first place.

But with Galaxy Vets, they've freed themselves up, and now they're working on the business for innovations like you're saying, and perhaps new services and a better patient experience. Can you talk to us about that?

[00:30:57] Emmitt Nantz: Yeah, it's really bringing everybody, It's not just the seller or just the team in the hospital, it's everybody within Galaxy Vets has their purpose and their passions. I'll talk with Dr. Sarah leads our telehealth organization, for example. That's her passion. That's what she does, and she loves to partner with others to bring that to life.

So same experience that you get in the hospitals, you got the A seller who did get into his business, they have a passion, and they lost some of that like we talked about. But by being able to partner with others, I really enjoy process, and I enjoy helping people identify those barriers and process and figure out ways that they can improve and grow.

So by joining an organization, enjoy joining the right organization. Yeah, you get that freedom to live your best life, to find and pursue your passions, and partner with others that have complementary passions and abilities and talents. So it's really the right way to be able to expand.

[00:31:45] Jeffrey Feldberg: And so let's talk a little bit now about the process because everyone's different, and with an esop it's a different way of going about things, but it's still a liquidity event, and I'm wondering what that looks like. So if I were a hospital owner as an example, and I was now in discussions with you, can you walk us through?

What are you looking for? And timing-wise, what does that mean? And talked a little bit about preparation, and as Deep, Wealth, we're all about preparation, and I know that's important to you as well. So for our listeners out there, if they could really get an inside look at, okay, you know, I'm speaking to Emmitt.

He's talking about these ESOPs. Here's timing-wise what they need, and here's what they expect of me. Can you walk us through that?

[00:32:26] Emmitt Nantz: Yeah. So one of the first things we're gonna talk to you about is actually your culture. Are you a cultural fit? Cause within an ESOP, we have to have like-minded values and like-minded views on what success look like. So really being able to speak to who you are, what your passion is, what your team is, and how you've gotten to where you're at.

So that's gonna be one of the first things to be prepared to talk to us about, are you a cultural fit? Cause that cultural fit is critical to the ability to actually grow. It's a cultural misfit becomes a lot of effort to manage a one-off that doesn't really lean in towards economies of scale. We're gonna take a look at financial. We're gonna try to understand, does it plug into where we're going? Something that you're gonna wanna bring to a conversation is identifying who galaxy bets is and how you fit culturally, but also, what's the expanded opportunity versus expended opportunity within your business from your view?

When I look at a veterinary hospital, for example, I look at the capacity of it? Are you already maximizing that capacity? Is there any upside potential? Is there any room for growth? Where do you see that? Where do you think the business can go? Another thing that's really important to me, I, from the seller, I wanna understand what they see their future like.

Do they want to get back into working on the floor and engaging pets more? Do they want to continue to manage the hospital? Are they looking for their own development and the opportunity? How are they going to contribute to the success of Galaxy Vets? So coming with a sense of those opportunities culturally, financially, and personally, it's really gonna have give us the opportunity to understand, do you fit and how are you gonna help make the group expand and grow?

[00:33:53] Jeffrey Feldberg: And you know what's interesting before we go into timing and other kinds of things, and it's really step number two of a nine-step roadmap. We call it X-Factors, that insanely increase the value of the business. And so, for our listeners, Emmitt did not lead off with financials. He didn't say, Yeah, I wanna see the financials first.

Tell me your culture. And you could have the best financials in the world. But Emmitt, I would imagine a hospital with the best financials in the world. And so now this is a prospective acquisition for you if the culture is terrible. You're probably thinking twice. No matter how good it looks, you probably don't want those headaches rolling into the group, and now you have a full-time job babysitting this new entity that you fit in there.

So culture, Welcome to the art side of Mergers and Acquisitions. It doesn't show up in a complicated spreadsheet. It's on the art side. So culture is huge, and even, I'm gonna call it the narrative where I imagine a business owner, the owner of the hospital says, Emmitt, I gotta tell you, we're only making this up.

Obviously, we're only at partial capacity. But wow. If we had your resources and your expertise, we could do a Two x three x five x of where we are today. And Emmitt, I suspect, based on the quality of the narrative, you can't see him now, but he's smiling, just even saying this. This is a hypothetical thought experiment, but you know, if this were the real deal, the right narrative gets Emmitt more interested.

Oh wow. What's the upside here? Perhaps it's gonna be a better value for us. A higher enterprise value will create a win-win all the way around. So there's so much beyond financials. And so, for your listeners out there, as you're preparing. What are you doing with your culture? What is your vision?

What's gonna be your narrative? Do you understand what Emmitt's challenges are and how your hospital, how acquisition of it is gonna help him solve some of his problems? And Emmitt, for all those vets out there who are listening to this, what would be some of the challenges that they could help Galaxy vets with that if they hear, they say, Hey, that's me.

Let me reach out to Emmitt. Let me have a conversation with him because I can solve that problem. So what are you looking for in terms of solving your problems in which a hospital as a new acquisition's gonna help you with?

[00:36:00] Emmitt Nantz: Yeah. Specific to Galaxy, that's a couple of key opportunities. One, I'll look at people, I'll start with people. If you have a team that you've pulled together this, this talks to the culture piece. But if you've got a team that's engaged, they're curious, they problem solve, and they want personal development and growth.

That's really exciting to a potential buyer, that's an opportunity to leverage the talent that you've acquired to expand the entire enterprise. And in an esop that's really important cuz I have a duty to help grow the value of this company for everybody that's involved. So I'm looking for that talent to join us.

We have a hospital that's done a really good job of creating talent. They're highly engaged, and that's a really exciting hospital to deal with. Others that we acquire if you're bringing a problem team or they haven't developed, or you don't have leadership meetings, you don't have conversations, and it's a big change for them.

That becomes more time and effort and which just detracts from the value creation. So that's really important. Look for that team. The other key thing for Galaxy Vets is where a hub-spoke model. Which means we want to create general practice hospitals and emergency specialty hospitals, and laboratory services collectively.

So by pulling resources together and pulling hospitals together, we're able to start to leverage those locations a little bit differently as part of a network versus an individual location. So if you have a hospital that can play a different role or has something a little bit unique or special that can contribute larger scale to a network, that's also really attractive to us.

[00:37:23] Jeffrey Feldberg: And you know what? As we're talking through this, Emmitt, my wheels are turning here because those in the Deep Wealth community who know the nine-Step roadmap, or they've been through the Deep Wealth 90-Day experience, a lot of what you're talking about in terms of your challenges, really goes to what I'm gonna say, mindset.

It's completely on the art side of a liquidity event. And here's what I mean by that. And so for our listeners, can you imagine, let's do one or two scenarios. In one scenario, you're speaking with Emmitt, and you've taken the time to get to know him. Galaxy Vets. You just heard what he had to say. They're looking for quality people, and you have a winning mindset.

It's a mindset of service. Emmitt, interesting. You tell me that you're looking for problem solvers. Let me tell you about our team and what we've done over the years with our culture, and we do regular training, and we're improving everyone's skills, and everyone has a role in the business, and here's how it all plays out.

Emmitt, as he's doing with me right now, is nodding his head. He's smiling, taking an active interest. If you conversely take a second approach, which obviously we don't recommend, and we don't talk about this at Deep Wealth, it's okay. Yeah. I'm speaking to this guy Emmitt. I just wanna know what size of a check he's gonna write for me.

And whatever my problems are, he'll figure the out. It's not really for me to care about two completely different scenarios. Emmitt as the buyer, in the first scenario, if you had to pick between the two, you only have so much time. You only have so many resources. Clearly, and I know I'm overemphasizing here for a little bit of effect, but clearly, in the first scenario, you're all over that one, and you're dropping the other one as fast as you can.

[00:38:52] Emmitt Nantz: It's exactly what we do every single day, Jeffrey. We're looking at these potential sellers, and we're really starting to ask those questions of, are you bringing me your problems that I have to solve? Are you bringing me an opportunity to add Wealth and value to everybody that joins this organization?

That's really where you start. and I'll say within veterinary space, I mean bottom line. The business is creating value for the pet owners. If you can deliver a service where they find value, they'll come back. They'll tell their friends. I wanna see a team that is focused on the pet owners. On the customers, and wanting to improve that experience, cuz that's the way that we grow.

But when we have a team that is resistant to change, or they're very self-focused or selfish focused, or a seller that's just looking for their check in the run. Those aren't things that help me create value in a group and doesn't help me. It doesn't help me expand the opportunities for the individuals to join our group.

So yeah, I'm definitely looking for alot of opportunities.

[00:39:45] Jeffrey Feldberg: You know, it's interesting going back to our step number three when we talk about the future buyer. You know, both with your self, Emmitt as well as with Ivan. It's never just about the money. You know, not once have you said, I really only want to get a group into the fold so we can five Exit, 20 Exit, 30 Exit, and just make a lot of money.

It's, Yeah, sure. Financials are important. We're not a charity. We're in business to be in business, but we wanna change the whole patient experience. We wanna change the industry, we wanna help the employees in. So, as business owners, isn't that where we wanna be with a future investor or buyer, with someone who it's not just about the money?

They wanna take the business to a whole other level. And when you think about legacy and the patients, aka your customers and your employees, what a difference that makes. And Emmitt, on that side of things, how does that differentiate Galaxy Vets compared to other groups that are out there in terms of how you're different, why you're different?

[00:40:41] Emmitt Nantz: Sure. One of my favorite savings is internal service begets external service. So I really believe that's one of the key differentiators for Galaxy, that's our entire focus is on the team that provides that service. They're the experts when it comes to having a conversation and engaging pet owners, helping them solve the problems.

What is the paying points? What are the opportunities? What's the treatment plan need to look like? Our focus is gonna be on taking away the barriers, making things more efficient, more predictable, those types of things that you can enjoy your job and love what you do. Our focus at Galaxy Vets is that internal service.

If we take care of them, they'll take care of the customers. So that's really how we start to approach this. And again, the ESOP gives us the ability to really stay focused on that because we know everybody's participated in the same desired look.

[00:41:25] Jeffrey Feldberg: Well, Emmitt, it really doesn't get any better. You want to forever change the industry. You're creating a market disruption. You're doing it with an esop that really, for everyone involved, creates a win. And you're doing some wonderful things out there. I mean, we could just go on and on about this, but we're at the point in the episode where we're starting to wrap things up, and let's do another thought experiment.

But you're gonna like this one. So for the thought experiment, I'd like you to think of the movie back to the Future. And in the movie, you have a magical DeLorean car that will take you to any point in time. So Emmitt here's the fun part. Imagine it's tomorrow morning, you look outside. Not only is the DeLorean car there, but the door is open, and it's waiting for you to hop on in, and you're gonna go to any point in your life.

So imagine now you're going to maybe it's Emmitt as a young child, a teenager, whatever point in time it would be. What are you telling your younger self in terms of, Hey, Emmitt, here's some life wisdom or life lessons, or do this but don't do that. What does that sound like?

[00:42:24] Emmitt Nantz: That's a good one. That's a really good one, Jeff. The thing that I would do is go back I used to focus really hard on the education. How do I invest in me? What makes me stand out? What makes me super talented? And a lot of us do that. But the advice I would give myself is it's not about me, it's about us.

We all live together. We only move forward in participation, in collaboration with others. honestly, it's a big driver of why I love the ESOPs so much. This isn't about an individual or a couple of individuals. It's really about the collective hole. Because when we are a collective group, we can achieve so much more than when we're trying to serve just a few people.

So if I understood that more when I was younger, I think I could be far advanced to where I am now and understanding that and probably had an impact and participated more success in my life.

[00:43:14] Jeffrey Feldberg: Wow. You know what Emmitt coming from a successful guy like yourself, and given all that you do and where you are for you, just say, Hey, if I would've known that back in the day, I could be that much further ahead. I mean, that's Wow, that really says alot. So words to the wise, for our listeners and Emmitt, we're gonna put this in the show notes for anyone who would like to get in touch with you online or otherwise.

What's the best way?

[00:43:35] Emmitt Nantz: LinkedIn is where I'm most active as a social network. We have our Galaxy Vets website,, and then just an email as well emmitt[at]galaxyvets[dot]com is a great way to just to reach out to me. If you have any interest. Do you have any questions or just wanna share your experience?

I'd love to hear from you.

[00:43:50] Jeffrey Feldberg: Terrific. All that will be in the show notes. It'll be a point-and-click. Doesn't get any easier than that. Well, Emmitt, that is a wrap. Thank you so much for just putting it all out there and sharing your wisdom and your insights, and as you wrap up this episode, as always, please stay healthy and safe.

[00:44:06] Emmitt Nantz: Thank you so much, Jeffrey.

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[00:46:37] Jeffrey Feldberg: Are you leaving millions on the table?

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