13: AmeriVet CEO Tom Thill on managing massive growth and successful business transactions

AmeriVet Veterinary Partners CEO Tom Thill joins the podcast to share how his values-led approach to acquisitions has fueled explosive growth and led to happier vets and healthier pets.  Tom also talks with Vistage CEO Sam Reese about what he learned navigating PE acquisition and why a CEO’s vision is so crucial to a successful sale.

Transcript

Sam Reese: Welcome to another episode of Life of Climb podcast. I’m your host, Sam Reese. Joining me today is Tom Thill, CEO of AmeriVet Veterinary Partners. Tom, thanks so much for joining us.

Tom Thill: Well great. I’m happy to be here. This is awesome. Thank you so much for the time.

Sam Reese: Can you start by just telling us a little bit more about AmeriVet? I heard you say that last year you helped more than two million pets in America, which is just an incredible accomplishment. Just tell us a little bit more about what you all do.

Company motto

Tom Thill: My company, AmeriVet, is a veterinary consolidator that buys veterinarians through a joint venture model. So we don’t buy 100% of the practice. We tend to buy about 70% of the practice. So the original owner’s legacy is maintained. We don’t change names, we don’t change employees. We really want to accentuate what’s great about practices and help practices and hospitals that need a little help with the business aspects.

Our motto is six words and it’s really three distinct parts of our motto. It’s “better business, happier vets, healthier pets.” And the idea there is that if we can help veterinarians do better business because we have marketing experts or accountants or anyone that’s a functional expert that can help these practices, then the veterinarians can do what they love. They can be freed up to really treat pets, so they end up being happier vets. And when they’re happier, we know that pets get better treatment, more pets can be seen, more pets can be helped. We can help these practices, recruit new veterinarians, use new tools, help with apps and things that help with the patient and client experience and technology to help the pets. And so that’s the business that we’re in. We’re about five years old, and we’re based in San Antonio, Texas.

Sam Reese: Your personal leadership journey did not start in vet school. In fact, I was looking at your LinkedIn and you started as a chemist, [then] became a sales guy in the pharmaceutical industry. So just tell us a little bit about how you got from where you started in this traditional business background to where you are today. How did this journey all take place?

Journey from chemist to entrepreneur

Tom Thill: Yeah, I love talking about this because I’ve talked to a lot of college kids about figuring out what they’re really good at doing as early as they possibly can. I’m a big believer in your strengths are your strengths and you want to leverage them as much as you can. And so doing something that you love doing, A, but B, that leverages your strengths is going to make you the happiest and you’re going to be the best at it. So, I can tell you that through trial and error, I was not a chemist. I was not built to be a chemist. I liked chemistry. I liked the puzzle that chemistry was, and I liked how things were put together. And that idea to me was fascinating, but it didn’t align with my strengths. And so I was a chemist for a very short period of time before I realized this is not for me, and if I have to sit behind this bench and do this for the rest of my life, I’m not going to be a happy guy.

I actually went to my boss once and I said, “Hey, is there a part of chemistry where you get to talk to people?” While he didn’t truly understand why I would want to do that, he said, “Have you ever thought about sales? They talk all the time.” And so I did. I went into sales and realized quickly that while my degree was in chemistry, I needed to understand more about business. What aspects of business might appeal to me? And so I promptly after undergrad went back to business school, and that opened my eyes to a lot of stuff. I liked strategic thinking, I liked acquisitions, M&A, and I liked marketing, sales, operations, but really services. When I got into the services industries, that’s where I really excelled.

And I liked the idea that services were hard to replicate. If you could provide the best service and a service that people needed where they needed it and the way that they wanted to receive it, you had a huge competitive advantage. And so I ended up becoming a COO and then a CEO of a services industry in human health care. In the services model, it was you provide a good service, you can charge more, you can get more customers, etc. And in medicine, it felt like sometimes that wasn’t always the case where the best medicine was always winning. And so I started looking at industries that potentially didn’t have as much payer exposure, so things like dentistry and ophthalmology and veterinary, and really liked the veterinary space. It was an area that was ripe for consolidation because it was pretty much under-consolidated, I guess, compared to some of those other service areas that I talked about. So that’s really what led me into veterinary.

Making your luck

Sam Reese: Over these last five years, the growth rate has just been incredible. You expanded more than 130 clinics in 32 states, 1,000% growth. It’s just been a wild ride for you. When you think about these last few years, what have been some of the trends that have helped drive some of this success?

Tom Thill: There’s always an element of luck in things, but you make your own luck too. You prepare to be in a position to take advantage of a market that’s advantageous. And so we have had tremendous growth. So we made our first acquisition in 2018, and we’re now at 215 practices in 32 different states, so five years later.

Sam Reese: Incredible.

Tom Thill: It is incredible, and you’re absolutely right, there are market dynamics that helped that, the low-interest rate environment helped any M&A company. You can see that in the news regardless of industry. So we were able to really make hay while the sun was shining there. We had great investor group. We had a great group of vets, too, that really wanted to see this model take off, meaning people that don’t want to retire, they still want to run their business, but maybe they want to step back, maybe they want help recruiting the next generation of vets. They don’t want to just toss their keys to someone and walk out the door.

So I think that early work helped us take advantage of that low interest rate environment and quite frankly, a market that wasn’t very consolidated. I think when we got started, it was maybe about 12% consolidated, so there was still just a lot of practices out there that were advantageous targets to partner with. I think you couple that with a lot of emphasis around pets during COVID. While we didn’t know that COVID would be a tailwind for us. When we were an essential service, and then when everyone started spending extra time with their pets, it actually overwhelmed the system quite a bit. It put a lot of pressure on our vets, and our vets always want to do what they can to help pets. And so there was some burnout from that. But I think if you look at the trends that we saw with [the] interest-rate environment, with pet ownership, with the amount of available targets that were out there, those are some things that really helped us get to where we are today so quickly.

Establishing a 5-year plan and a ‘golden five’

Sam Reese: I like how you opened it up though. You’re right, there’s always a little luck, but you got to put yourself in a position to take advantage of that luck and you clearly did that. But tell us a little bit more just about what has had to change for you as a leader for these last four or five years that you’ve really expanded?

Tom Thill: I didn’t really have a playbook on how to start a company. I had been a very small entrepreneur at one point in my career, but I’ve worked for large organizations, and what I looked at, I looked to a lot of peers. I took a lot of advice. I read a lot of books. I really tried to figure out what are the key things that I need to build early in a company’s lifecycle. And I looked at what I call the “golden five.” It’s your north stars of the business to help you get to where you want to go. For me, it started with the end in mind. I’m PE-backed. We all have a sense of what having private equity money means in terms of exits and timing. And so we were looking at a five-year horizon, and I thought about the world that way. “What did I want to be in five years?”

So that led me to kind of building out my golden five: Vision at the top. Then, mission. Values — I actually have behaviors, but similar. What are your values as a company? How are you going to behave? And then your strategy. So this gets to how you’re going to approach the market, what’s the market that you’re going to approach? And finally your operating model. So how are you going to go about attacking that segment? Those five things: vision, mission, value, strategy, and operating model were the things that I focused a lot on because to attract good talent to a small company, to attract more financing, to get customers to say, “Yes, I want to come work with you. I want to sell my life’s work to you,” you’ve got to know where you’re going. You’ve got to be able to paint a compelling vision for the future and where you want to be. And so I did.
I spent a lot of early time on that and then reinforcing it through. It’s one thing to say, “Hey, we have a set of behaviors or a set of values as a company.” It’s another thing to live ’em. And so living that vision, living that mission and those values was really important.

Sam Reese: Are you still having as much fun?

Tom Thill: Oh, yeah. Different challenges, but just as much fun. At the end of the day, it’s about pets and it’s fun. We have pets in the office, and we have screens up because our practices are spread out all over. So we have TVs up throughout the office and they’re showing pictures of the practices that we support. So at the end of the day, if you’re an accountant, you can be an accountant anywhere, but why would you work for AmeriVet? You work for AmeriVet because you see every day these practices that you get to support. You know that they’re helping pets like what you have at home, and hopefully, we provide a better environment and a mission that you can attach yourself to versus some other industry.

Sam Reese: Tell me a little bit about the company culture at AmeriVet. How has it really contributed to the success of the business moving forward?

Behaviors that drive culture

Tom Thill: I started as a CEO in Vistage of another company and switched. And when I was building this company, we had a speaker come in. You talked about behaviors rather than values and behaviors are values in action. It’s easier to understand. There’s less ambiguity around what it is. I think a lot of companies have values and they’re great when everybody’s aligned to what they mean. For me, I needed to hit the ground running a little bit faster. So I put these behaviors in place and behaviors, I think, are a little bit easier to understand, and they drive the culture. So the culture is really driven about how people show up to work, how they interact with one another, and these behaviors that we recognize people on, we put it in performance reviews, are really what I think drive that and, in turn, drives the culture.

So there’s six of them. I’ll comment on a few of them just because I think they’re fun, and I think that’s the kind of culture we have is one that’s fun, but we work hard. At the end of the day, we know we’re helping pets. One of our behaviors is “have hustle.” We want to work hard.

Sam Reese: I like that.

Tom Thill: We want to have hustle. And everybody knows what it’s like to be on a sports team and have hustle. You run hard, you want to be out of breath, that kind of thing. You want to sit down.

Sam Reese: Dive for loose balls, all that stuff.

Tom Thill: Yeah, exactly. Do the extra stuff. Go above and beyond, have hustle. And if everybody around you has hustle and you have hustle, it feels good. You feel like you are on a winning team. Another one that I like to talk about is “no jerks allowed.” So plenty of people have things like a golden rule or a platinum rule or something like that, but everyone knows what it’s like to work with a jerk. And so we simply put it as no jerks allowed. We don’t want that. And we often have people at the organization calling one another out like, “Hey, man, don’t be a jerk.” And they don’t mean it as an insult. They mean it as like, “Hey, remember the behavior.” And it’s easy for people to identify with that. The other thing we really try to instill in folks is the behavior of [practicing] blameless problem-solving.

Sam Reese: Love it.

Tom Thill: We are always trying to discover the root cause of something that’s gone wrong in the industry or how to make something better, but it can’t be about people. If you’re constantly worrying about pointing the finger at the individual, then you’re not really solving the root cause of the problem. So we try to practice blameless problem-solving. Focus on the solution rather than the individuals. And I think there’s some more behaviors we’ve got, but that really drives the culture and the culture, because we work in the vet space and because we keep that top of mind, we keep pets top of mind. Pets mean a lot to people — the employees and others. And I think you get that emotional connection to what we’re trying to do, and we’re trying to help the industry, and in a way where our behaviors drive your peers in a certain way. And if that’s what you like, this is a great place to work. We’ve won a number of Best Places to Work” awards in San Antonio, and I think it’s really driven from these kinds of things.

Sam Reese: Have you ever read “The Four Agreements?” Have you ever read that book?

Tom Thill: I have not.

Sam Reese: Well, you just recited the four agreements. It’s a good classic sports book. It’s not really, but a lot of teams use it. It has four principles: “Don’t assume.” “Don’t take things personally.” “Your word is impeccable.” And, “Try your hardest.” This is the Tom Brady, Michael Jordan-

Tom Thill: Yeah, interesting.

Sam Reese: It sounds like this isn’t easy work to go out there and partner with 215 vets. You got this great platform. You have this understanding that these are people [who] want to continue to run their businesses, but what else really drives them to partner with AmeriVet versus going in a different direction and what does that look like?

Tom Thill: This is an industry that does have a fair amount of competition. I think there’s probably no less than 40 folks out there [who] do what we do in varying scales. There’s a handful of folks that are bigger than us and a bunch that are smaller, and I think everybody has a very different value prop. And so it’s really how you communicate that value prop to folks so that they truly understand what it’s like to be a part of a group like AmeriVet. So we have made great investments in our teams that go out. It’s a very relationship-driven business, the veterinary business. And so we want to have the right relationships to open up the right conversations so that we can really truly communicate the value of being a part of AmeriVet. It’s a lot of hustle. There’s a whole lot of veterinarians out there that we can go and have these conversations with. So we want to target the right ones that fit our business model.

And that’s why we segmented and chose the segment that we did and built the company the way we did because it’s pretty quick to identify someone that would like to be a part of a joint venture. The value of that is that the equity that they keep continues to grow and then exits alongside us in the future. So the platform’s going to exit for a much bigger multiple than they could get today. So it’s got to be someone that’s got the right growth mindset. And we can establish that pretty quickly because some people… Hey, I understand it. It can be a “bird in the hand,” and you don’t want to necessarily keep putting things at risk. I get it. But for those that have the right mentality around growth and want to continue to capitalize on that, our value prop aligns pretty well with them.

But at the end of the day, you’ve got to have a good sales team. You’ve got to be able to go out there and communicate effectively. You’ve got to be able to build the right relationships and prove the value. Our track record is very good. We like to share that. We often share references and referrals from our existing practices that we’re partnered with because vets want to hear from vets. How did this go? I hear what the business guy’s telling me or the sales guy telling me, but at the end of the day, I’m not a vet. And so they want to hear from someone who’s gone through it and we’ve got a great network of partners that have had great experiences with us that we do leverage.

Learning from mistakes

Sam Reese: How has that changed? When you first started going on this quest to bring people into the AmeriVet platform to where you are now that you can …  I mean, It’s a machine to be able to bring in 215 acquisitions. Were there any big mistakes made early on or changes along the way that allowed you to turn that into a really self-driving engine?

Tom Thill: Every couple months.

Sam Reese: Really?

Tom Thill: Oh, yeah.

Sam Reese: It’s just got to be that dynamic, huh?

Tom Thill: I think we learned what makes a good partner who values this relationship. What are the features of a practice to look for? And we continued to refine our scorecard on what makes a good partner. And I’d say we did that probably every three-to-six months as we learned. We’d make one acquisition that looked just like another acquisition, and yet one would be wildly successful and the other one would be mildly successful. And so you start to diagnose and pick apart what was it about that practice that allowed it to grow so much faster than this other one?

And with that, then you learn enough things that you start looking for that. And again, every six months you have another one that doesn’t perform like you thought or one that over-performs what you thought and you think you diagnose what is going on, what are the features or markets that these practices are in that we can replicate? And so it was a lot of trial and error. It really was. What we know now about what makes a great practice versus what we did at the very beginning is very, very different.

Sam Reese: Last year, you led the company through this sales process to a new financial partner, [a] private equity firm. What were the big moments that led you down that path? And let’s just get a feel for our listeners on what that experience was like because you had to navigate that whole thing.

Tom Thill: Yeah, look, I had great partners going through it. And so unlike, I’d say, [a] entrepreneurial founder doing it themselves, I did take PE money pretty early. That’s who I ended up partnering with early on to really start the business, which is different. Normally PE doesn’t start businesses from scratch like we did, but together we did. So I had PE backing, they had been through it. I talked to a lot of folks [who] have sold businesses, getting ready for the transaction, things to look out for, things to watch for, for my team to make sure that I could take them to the next round and make sure that they were getting what they needed out of the transaction, as well as our veterinarians. They were first and foremost, the partners that we had.

And then the investment bank, there’s an investment bank that serves as your broker. They’re your real estate agent. If this was a house you’re selling, they’re your realtor. They really, really were helpful in helping craft the message. They knew the market that was out there, other transactions that had happened, what was valuable, what wasn’t valuable. And I think honestly what made it easier, which it wasn’t an easy process, but was having all these experts that could help you and guide you and give you advice. For me, it was definitely long hours. You’re talking to a lot of people, but if you’re passionate about the business, you’ve grown the business, you’ve built the business, it’s fun to talk about the business. And so where we had come from, what we had built, and what we were still trying to build, you get pretty passionate about it. Yeah, you got to talk for quite a while, but at the end of the day, it’s fun to kind of talk about a successful company.

Sam Reese: Well, it was fun to hear some of your comments about the value of Vistage, the CEO peers that you got to brainstorm with, the speakers. I just really enjoyed hearing that. And then you said something that hit me as you talked about the four areas the CEO should focus, vision, culture, people and delivering the numbers. And I wondered, what do you think of those four, vision, culture, people and delivering the numbers, where do you see CEOs most often neglect or fall short of those four things? Which is the one that they forget about the most?

Importance of staying focused on your vision

Tom Thill: That’s a good question because I think good CEOs keep all four of those front of mind. But what I will say is I think just the nature of business, we tend to be very focused on delivering the numbers and potentially at the expense of the other three. I think vision is probably the one people maybe forget about the most, only because, hey, that’s five years out and they don’t often check in to say, “Hey, are we on this path still?” I think it takes more discipline to be checking in on your vision and making sure you’re still on that path, whereas you’re hit with KPIs and numbers every day and you know how you’re doing and you know what you’re focused on, and you’re focused on delivering the day and the week and the month and the quarter and the year.

Whereas I think the vision can sometimes sit out there and if you as the CEO aren’t providing, “Hey, this is what it looks like next year, this is what it’s going to feel like when we’re standing there having accomplished these things,” I think the CEO has got to continue to paint that picture and create the vision for success. What does this look like? And so I think that’s probably the one that maybe gets neglected more than others.

Sam Reese: I think that’s good counsel, really good counsel because when I think about what happens when you get to the point of a transaction once you got there, you needed to have a really strong vision. It wasn’t enough just to have the numbers. So people are going to partner with you and now put a lot of capital at stake. They got to be excited about your vision. Is there any other advice you would give to some of the other leaders and CEOs out there listening when they consider that next step with their business, selling it or partnering with the private equity firm?

‘What does success look like for you?’

Tom Thill: Yeah, I think for me, and I have given counsel to other folks through Vistage or friend groups or these kinds of things, and I think I see people get caught up in the process and forget what they wanted to get out of the process. So I think sitting down before it gets crazy and saying, “This is what success looks like. This is what I want out of this. Is it a dollar amount? Is it something that you want the company to be able to advance? Is it a new technology? Is it access to some new market?” But really to be clear with yourself on what you want out of doing a deal. I’ve unfortunately seen people that are like, “Okay, well this is just the next step in the evolution. I need to do this deal.” But they’re not real clear with what they want out of the deal. So, talk to people. Talk to others. Really be clear about what you think success is going to look like so that you can keep that front and center because it’s a hectic, crazy, hard process to go through.

Sam Reese: Great advice. I’ve seen people get so focused on just the process that they let the business go sideways. So this process elongates and now their business is worth less because they’re not really focused on delivering when they need to.

Tom Thill: That’s a great point. You’re absolutely right. That is what makes the whole process challenging is you still have a day job.

Sam Reese: With all the complexities that now happens with this big business that you guys have built, how do you as a CEO still keep your ear to the outside? Great CEOs also have to make sense of the meaningful outside for their business. How do you do that?

Tom Thill: It’s sometimes difficult to keep your eye outside the business because you are spending so much time inside the business. And so I do think things like Vistage, setting aside time to read industry reports or to step back and step out of the day-to-day is something you’ve got to schedule, something you really have to try hard to do. In my case, I’ve got a private equity sponsor. Those sponsors help look for that stuff too. So maybe it doesn’t have to be all you, but you’ve got to set aside the time to look at that, and think about what the future’s going to hold. When I talk about vision, it’s vision for sure, hey, the company’s vision is this statement, but it’s also having the vision to try to look around corners and see what could be coming. And the CEO really owns that. Looking at the industry data that’s out there and trying to predict what could happen in a particular market and how to take advantage of that or to batten down the hatches for something that might be coming.

Sam Reese: You’ve got a ton of advice, but maybe one extra piece of advice that says all you other CEOs on your climb to be better leaders, what’s one big thing maybe you might add that wouldn’t normally expect as leaders to learn that you could help us with?

Seeking advice from others

Tom Thill: Don’t be afraid to talk to others [who] have done it. Don’t have such hubris that you know it all and you can do it all. I’ve learned so much from peers, different businesses, smaller businesses, bigger businesses. Don’t be afraid to talk to those who have done what you are trying to do. Get time on their calendar. Listen to their story. People are pretty open. They want to help. They want to tell you where they made mistakes and what they could have done to fix [them]. And I think there’s been a few mentors that I’ve had and folks that I’ve asked that, “Hey, can you give me some time? Can you help me by telling me your story?” So my final piece of advice would be talk to those who have done it.

Sam Reese: Great piece of advice. Thanks, Tom, for spending time with us today. It was fantastic to hear your story and the story about AmeriVet to hear how a chemist turned into a successful CEO. Thanks for your time today and for all your insights.

Tom Thill: Thanks, Sam. It was great. Really appreciate talking to you, and thank you very much.

Sam Reese: Thanks for joining us for this edition of A Life of Climb podcast. Friendly reminder to please subscribe or follow the podcast to get all the latest episodes. And please visit vistage.com/podcast for more resources to support you on your leadership journey.

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