From veterinarians to veterinary accountants: An interview with Paolo and Anne Lencioni

While most people reading this will have worked with Paolo and Anne Lencioni, not many people know their story.

How did two South African vets end up market leaders in veterinary practice accounting and valuing in Australia?

We recently sat down with them to ask them about their journey, their extremely varied and colourful professional history, working through multiple degrees, professions and countries and the unique perspective this gives them in the veterinary industry.

Q: Where did you start your veterinary careers?
P & A: We both studied veterinary science in South Africa, but we never worked there. Two days after graduating, in 1995, we left and went on a working holiday to the UK, from which we never returned.

Q: Where did you meet?
P & A: We were in the same class at vet school. We were put together in anatomy class to share a box of bones for the first part of the course, which detailed every bone in all the species. The box contained about 100 bones from 3 species (dogs, cattle and horses).

Q: What made you leave being a vet behind and move into accounting and valuing?
P & A: Leaving veterinary was not a planned event. We opened our own start-up practice and realised that with our vet course, we were very lacking in certain skills: Business, software/IT, tax and accounting.
Anne enrolled for an MBA through Edinburgh university and Paolo enrolled in a City and Guilds computer programming diploma. After completing these, we both enrolled into accounting as we thought that it would provide us with the necessary skills.
We did all of the above while we owned and worked at our practice and completed our studies by correspondence/distance learning, graduating in 2006.

We moved to Australia at the end of 2005. Once we got here, we thought it would make sense if we exposed ourselves to working as accountants rather than as vets, just to see what it was like. After doing this for a few years we could see that there was a demand for a niche accounting firm that focused specifically on vet business. We thought about buying an existing accounting firm and changing it over slowly, but then decided to just do a start-up. The business grew reasonably quickly, and valuation work became part of the service because it was something a lot of our clients needed.

Q: Is there anything you miss about being a vet?
P & A: Because we are very involved with vet practices, their challenges, problems and even their standards of care, we don’t really feel like we have left the profession. We are both animal lovers and dealing directly with animals is probably the thing we don’t do as much and miss. Anne makes up for this by rescuing dogs and keeping them in the office with us all the time.

Q: What brought you to Australia?
P & A: The move to Australia was a lifestyle choice. The UK was never intended to be a long-term thing and after 11 years there we decided to travel a bit and look around for somewhere better to live. Australia won by miles, we could not find anywhere better.
Even after completing the first stage of our North American Vet board exams, we still decided that Australia was a better place.

Q: Were you both equally motivated to make the career and geographic changes, or was one of you more enthusiastic than the other?
P & A: We are lucky that we seem to agree very quickly on the big decisions. So we jointly made the decision to sell the practice and move to Australia. We also both agreed that Australia was the first choice over and above the other places we had been to and shortlisted. With regards to the career moves, we also decided jointly to do it, as there seemed little point in one of us studying all weekend and the other sitting around doing nothing – we had always studied together at vet school anyway so this was not so different.

Q: You’ve worked in the vet industry in several countries – I realise that it’s been a number of years, but what struck you as different about the Australian industry when you got here?
P & A: I think the main difference is that practices in Australia focus more on servicing a lower number of clients better. In South Africa and the UK practices tend to have shorter consulting times and a higher volume of clients. The rest is essentially the same.

Q: If you still have connections with the industry overseas, what do you think the Australian vet industry could learn from the overseas vet industries that you worked in and what should they be learning from us?
P & A: We don’t think there is anything specifically better or worse about practices in Australia vs practices in the UK. What does exist in all countries are practices that are well run and practices that are run badly. I think that the profession needs to learn from each other, focusing on what well-run practices do. And one of the things that well run practices do is that they are run as a business and the partners/owners have an interest in business. This does not mean that they care for their patients less and don’t like being vets, in fact they care about their patients more – but they make calculated financial and strategic decisions on buying better equipment, supplying better facilities, recruiting better staff, managing their staff better and paying their staff better.
Perhaps something to learn from this is that the veterinary curriculum is lacking in any courses that lead prospective vets to understanding business, and it would be a good idea to introduce some form of formal business training into the veterinary courses.

Q: ValuVet has an interesting background as the only valuation company that has always been run and operated by vets (first founded in 1996 by Jim Martin, then run by Tony Thelander 2006-2018 and now by you). What ‘edge’ or advantage do you think this has given ValuVet over general accountants when valuing a vet practice?
P & A: It’s very difficult for a generalist accountant to know what a business is worth if they don’t know what the market for that industry looks like. Whilst the greatest part of a valuation is objective and looks at very specific financial parameters, the final part of establishing a value requires industry knowledge. And this is why Valuvet has succeeded, because there has always been veterinary-specific knowledge present. For example, how can you say a coffee shop is worth the same as a veterinary practice if they make the same profit? You can’t, because the risks are completely different and the current economy may be treating one industry better than the other. Also, the way clients are ‘bonded’ in a veterinary practice where the business knows their names, addresses, mobile numbers and usually the names of their entire family, is very different from a coffee shop where none of this is necessarily known. For these reasons, an accountant who works on a lot of coffee shops and restaurants can value coffee shops and an accountant who works on a lot of vet practices can value vet businesses. As a rule of thumb, we would say that if an accountant does fewer than 10 valuations for a particular business type a year, then they probably don’t get enough exposure to know what the market looks like for that business. So “how many veterinary practices have you valued in the last year?”  is a good question to ask any accountant/valuer before you pay them to do a valuation.

Running a successful business is not a sprint or a marathon…

There is a common saying that running a successful business and having a successful career is a “marathon, not a sprint”. The saying is meant to remind people to think long term, to pace themselves and have longevity in mind, rather than just short-term results.

At first, the metaphors of the sprint and the marathon may seem a fitting comparison for a business and/or career. They bring to mind images of results-focused individuals putting whatever they can into their respective races, to get the best result they can. People committing themselves to getting ahead and staying ahead of the competition.

However, when you look at the complete lifecycle of a business, the metaphor is flawed. A marathon or sprint implies a race where you are supposed to exhaust all your resources to get to an end point ahead of your competitors and, as such, it misses an important measure of a successful business and career. Surely one of the measures of a successful businessperson is whether they have built something that will carry on after they have gone…  something that is sellable?

Famous successful businesspeople (Ray Krok with McDonalds, Steve Jobs with Apple, Bill Gates with Microsoft, Ingvar Kamprad with Ikea, etc., etc.) are seen as such, not just because of what they were able to build themselves, but also because they were able to build something that was more than them alone. They were able to exit, and the business survived and thrived after their exit.

In this respect, if we are going to compare running a successful business with a running race, it is much more like a relay race than a sprint or a marathon.

For those unfamiliar with the relay, it is a race where several runners from the same team take turns running. Each runner runs their interval of the race to the best of their ability; at the end of each runner’s race, they need to pass a small rod—the ‘baton’—to the next runner, without slowing down, giving the main responsibility for the race to someone else from that point forward.

Having a successful business and career involves being focussed both on your individual race and being able to ‘pass the baton’.

Your individual race is incredibly important. As a vet, the measure of this will be your ability to gather a large and loyal client base and run a profitable practice for many years, with a good reputation for ethical and quality clinical work.

Working out how to “pass the baton” successfully in a business means having an exit plan, so that you are able to sell your practice at the end of your time on the track. Without this, you will miss out on a significant financial component of your career and your business/practice’s legacy will end with you.

When a business owner understands this, they start to shift their business game plan and the way they approach practice decision making, recognising the larger strategy of building towards a handover event. For example:

  • Ensuring that the lease on your premises has more years than you will need, so that the person that comes after you will be secure.
  • Maintaining and reinvesting in your practice fit-out and equipment, so that it lasts beyond your time there.
  • Understanding that your time in practice is not about depleting all of your resources to squeeze the most out of your time on the track, but instead pacing yourself and recognising the impact of fatigue, so that you can pass the baton while still in full stride, rather than when you (and your business) have started to slow down. This enables you and the person you are handing over to get the full reward for the gains that you made in your race.
  • Acknowledgement that a good handover often requires the two runners to be running at the same time side by side, to affect a smooth handover without slowing down. As a business owner this usually means agreeing to work for a period post sale alongside the buyer, to ensure maximum client retention.
  • Understanding that “passing the baton” in business is not just a financial transaction, but also about compatibility. The relationship between a buyer and seller should not be an adversarial one, where each is trying to squeeze more out of the deal at the other’s expense. The bigger picture common goal for both parties is the ongoing strength of the practice and, while a sale is a negotiation of price and terms, it needs to be done with this foundation. For example:
    • A vendor choosing between two possible buyers needs to take compatibility into account. An extra $10K in sale price will not adequately compensate a practice owner for the heartache of having sold their practice (and handing over staff and clients) to an unethical or clinically incompetent buyer.
    • A buyer squeezing an extra $10k-$20k out of a seller at the expense of the ongoing relationship of the vendor compromises what is being bought and sold and makes no sense at all.