Close
Enter your text here
.

Anicura

Admissibility of partnership companies between veterinarians and business economists
Admissibility of partnership companies between veterinarians and business economists 768 1024Sven Jan Arndt
Of:
BGH decision II ZB 6/21 of 15 February 2022

Thebackground:
Veterinarian Susanne Arndt ran three small animal practices in the Karlsruhe area in the usual legal form for freelancers - the one-man company. As the business grew, she wanted to convert it into a limited liability company (GmbH). However, the transformation law requires a registered legal form for this (even if it is only a registered merchant). However, the latter is not possible for a freelancer, as he is not a merchant. Ergo, the only way was to found a partnership company consisting of freelancers (in this case: a veterinarian and a business economist). The partnership was founded and registered by the Mannheim District Court.

The case:
The Baden-Württemberg Chamber of Veterinary Surgeons applied for the deletion of this company on the basis of § 21a BO, as according to its professional regulations a partnership company is only possible among veterinarians. Parodoxically, at the same time it pointed out to the two partners that they could implement their plan in the form of a limited liability company!

The decision of the BGH of 15.02.2022 - II ZB 6/21 - OLG Karlsruhe / AG Mannheim:
"A partnership between a veterinarian and a business economist is permissible under the Heilberufekammergesetz of the state of Baden-Württemberg."

The BGH's reasons:

The professional code of conduct of the LTK BW is not a formal state law, which is why the BGH was able to decide without consulting the BVerfG.

§21a BO violates the precedence of §30a para. 1 sentence 2 of the Baden-Württemberg Chamber of Health Professions Act (hereinafter: HBKG BW), according to which veterinarians can run a practice together with persons who belong to a state training profession in the health sector, a natural science profession or a social education profession, pursuant to §2 para. 1 no. 3 HBKG BW.

The interprofessional associations of chamber members permitted by the HBKG BW cannot be restricted by the statutes of the chambers.

Accordingly, there are also no public welfare concerns that preclude interprofessional cooperation with a business economist (inter alia because of Art. 12 para. 1 GG - free exercise of profession, but also §30a HBKG BW is not to be understood conclusively).

Such cooperation is also not contrary to the purpose of the HBKG BW, because "the definition of the permitted forms of professional practice is intended to ensure that compliance with professional duties can be enforced in all legal forms of health professional activities".

At this point, however, the reasons for the judgement become exciting, because it goes on to say:

"The legislator wanted to exclude commercial activities as a health professional. Commercial activities are carried out by commercial partnerships and legal persons, but not by members of the liberal professions... to which a business economist... belongs. It is only for the health professional activity in legal entities that the legislator has therefore established detailed requirements in § 30a, para. 2 HBKG BW in order to exclude a commercial health professional activity."

And that is particularly exciting if you take a closer look at this paragraph:

§ 30a (2) HBKG BW:
The health professional activity for a legal person under private law requires that

  1. The object of the company is the exclusive performance of health care activities,

2. all shareholders are persons pursuant to paragraph 1 sentence 2,

3. the majority of the shares in the company and the voting rights are held by members of the Chamber pursuant to § 2 paragraph 1 numbers 1 to 3 or number 5 and shares in the company are not held for the account of third parties,

4. at least half of the persons authorised to manage the business are members of the Chamber pursuant to § 2 paragraph 1 numbers 1 to 3 or number 5,

5. a third party does not participate in the profits of the company,

6. there is sufficient professional liability insurance for the legal entity under private law and the professionals working there, and

7. it is ensured that the health professional activity is carried out by the members of the Chamber in accordance with § 2 paragraph 1 numbers 1 to 3 or number 5 on their own responsibility, independently and non-commercially.

Further details are regulated by the respective professional code of conduct."

If one now follows this passage of the HBKG BW, to which the BGH explicitly refers - what does this mean for chains like Evidensia or Anicura in Baden-Württemberg? Wouldn't the State Veterinary Chamber of Baden-Württemberg have to intervene immediately and ban them?

The BGH's comments on the veterinarian's duty of confidentiality are also extremely interesting:

"Finally, a veterinary surgeon (§ 2 para. 1 no. 3 HBKG BW) - unlike the members of the chamber further covered by § 30a para. 1 sentence 2 ... has no right to refuse to testify pursuant to § 53 para. 1 no. 3 StPO. In contrast to the other members of the chamber ... a veterinary surgeon does not have a special relationship of trust with his client, which includes and requires the protection of confidentiality interests worthy of protection (cf. BVerfGE 38, 312, 323 f.)."

Conclusion from our point of view:

  • Not everything that state veterinary associations write in their professional regulations is sacrosanct.
  • With the clear reference to § 30a para. 2 HBKG BW, the State Veterinary Chamber of Baden-Württemberg has been given a clear mandate to check the chains operated by financial investors here and to intervene accordingly.
  • We are curious to see whether this will happen and thus ensure legal certainty!
Financial investors and the trend towards the veterinary chain
Financial investors and the trend towards the veterinary chain 681 1024Sven Jan Arndt
Of:

1. current trend

It was only at the beginning of June that Mars Petcare's spectacular takeover of Germany's largest vet chain Anicura caused a stir (we had reported: https://doc4pets.de/anicura-schliesst-sich-mars-petcare-an/). Now a new "chain" - Vetsana?

And the next financial investors are already in the starting blocks and promise the selling and acquiring veterinarians the "blue from heaven". Currently for example the Vetsana GmbH (nice name - sounds very serious and like a veterinarian) from Munich is on its way. They are long-term committed (10-15 years) and are all entrepreneurs. It struck us, since they appear with quite large marketing expenditure in the Green Heinrich and with Wir-sind-Tierarzt.de as advertising partners.

He said that, unlike the big chains, you are the loved ones. Everyone can develop freely as a young veterinarian. The delivering veterinarian knows his business is in good hands. Etc. etc.

But they always want a majority when they take over a practice - quote: " Yes, typically we take a majority stake in the practice. We are very happy to see the managing veterinarians taking a significant stake in their own practice as shareholders. This is not a must but a can. The sizes are flexible within this framework."

2. vetsana - a new concept?

Let's look behind this new construct, which wants to do everything better than the other chains:

a) There are no veterinarians among the investors - how are economies of scale to be exploited, which one would like to claim: "And of course a network has other advantages, for example in purchasing as well as in training and the exchange of know-how. ?

b) Legally, this construct, as well as Evidensia and Anicura, stands on more than shaky, national legs. The majority of the state veterinary associations stipulate who and with what majority veterinarians must be involved in a practice. So very detailed the State Veterinary Association of Westphalia:

"§ 28 Veterinary company in the legal form of a legal person under private law

1. Veterinarians shall be authorised to have an individual practice or a practice in a group in the legal form of a legal person governed by private law. To operate a company in the form of a legal person under private law, the following conditions must be met: 1. the company must be responsibly managed by a veterinarian, 2. the managing directors must be majority veterinarians, 3. the majority of the company shares and voting rights must be held by veterinarians or, on the basis of provisions in the partnership agreement, the powers for resolutions with reference to the professional code of conduct of the 12 Westphalia-Lippe Chamber of Veterinarians, the veterinary code of professional conduct and the rights and obligations of veterinarians arising from applicable law must be irrevocably transferred to a body in which licensed veterinarians hold the majority of voting rights. 4. every veterinarian working in the partnership must have taken out sufficient professional liability insurance; in the case of partnerships with limited professional liability, Section 8 Paragraph 4 of the Law on Partnership Associations of Members of the Liberal Professions must be given priority.

It is actually quite remarkable that the state veterinary associations establish professional codes of conduct, but do not enforce them. Why not? Fear of EU law? As a normal citizen you ask yourself, what are the laws and rules for?

c) Which veterinary practice has Vetsana already taken over!

(d) What kind of return does such a private investor expect when he commits himself so long-term? Those who, by their own admission, only want to exit after 10-15 years usually demand a decent multiple of the turnover of their network. That is, the veterinarians to be taken over must of course dramatically increase their sales during this time, so that a proper exit is possible. We are already talking about a 25-30% increase in turnover per year - otherwise, in our opinion, this does not make sense for such a "private investor". From our point of view, the perspective of the young veterinarian who has put his sweat into the practice for 10 years, could only own a maximum of 49% and is now being sold to another investor (e.g. Mars Petcare) without having a say in the matter. And what will happen there? Is he really allowed to continue to develop as he wants?

3. a look behind the scenes

Let's take a deeper look behind the scenes, which the editorial staff of Wir-sind-Tierarzt.de doesn't seem to have done exactly. If one is otherwise nevertheless so proud of its critical reporting, one seems to forget the critical distance fast, if "the ruble rolls" - which was made fairweise at the end in addition, in such a way recognizable: "Disclosure: VetSana is sponsoring partner of wir-sind-tierarzt.de for the summer months 2018. The article was written in the context of this advertising partnership - read more about this form of cooperation here."

According to the commercial register, Mr. Ulrich Biffar (Switzerland) holds 63.1% of Vetsana GmbH, a Pelecanus GmbH company holds 26.76%, Mr. Florian Arndt 7.888% and Mr. Uwe Bühler 2.252%, while Mr. Felix Hauser is behind Pelecanus GmbH.

Mr. Biffar, Mr. Hauser and Mr. Arndt are all at the same time in leading positions (managing directors) at Lamont Capital GmbH - also in Munich. According to their own statements, with this company they invest in highly profitable companies: "Lamont Capital is a company based in Munich, which focuses on consulting in the acquisition and ongoing support of medium-sized companies. Its investments focus on majority holdings in companies in German-speaking countries with an enterprise value between EUR 10 and 75 million, which are sustainable and above-average profitable".

Now the question arises immediately - how many weddings can you dance at. Not just a little, but professional? In such a way that the dancing partner also enjoys it and does not have blue feet after the dance. 😉

Ulrich Biffar was also the German head of the financial investor Bain Capital. Mr. Arndt and Mr. Hauser were also with Bain Capital. Bain Capital is known for not being squeamish with their investments:

"Bain Capital is accused of having exploited various companies and caused the subsequent bankruptcy:

GS Technologies, a steel mill in Kansas City had been in operation since 1888. In 1993 it was taken over by Bain, and barely ten years later the company was bankrupt. According to a report on US television station MSNBC, 750 people lost their jobs at the time. Bain, on the other hand, had profited from the business: The company had made 12 million dollars, but had previously invested only 8 million dollars. In addition, Bain apparently collected at least 4.5 million dollars in consulting fees. [4][5]

In 1992, Bain Capital bought American Pad & Paper. In 1999, two of the company's mills were closed, 385 jobs were cut and the company was in debt to the tune of $392 million. In 2000, the company declared bankruptcy. 6] The Boston Globe reported that Bain made $100 million to Ampad on a $5 million investment, including tens of millions in management fees. [7]

Bain Capital and Goldman Sachs bought Dade International in 1994 for about US$ 450 million. About 900 jobs were cut or outsourced. Over the next few years, another 1,000 workers were laid off and the company's credit debt quadrupled. In 2002, the company declared bankruptcy. [ 8][9]

In 1997, Bain Capital bought LIVE Entertainment for US$150 million. Subsequently, one in four of the 166 employees was laid off. 10] Bain Capital made a profit of US$578 million through Stage Stores, American Pad & Paper, GS Industries, Dade, and Details, and all five companies went bankrupt shortly thereafter. [11]“

4th outlook

A rogue who thinks evil now with the sentences from said - let's call it "Advertorial" from Wir-sind-Tierarzt.de:

" VetSana was founded by German entrepreneurs under the leadership of Florian Arndt and myself. We invest our own money. There is no investment fund or any other form of venture capital behind it, nor any other company in the veterinary sector.
We are private investors and we have a long-term investment horizon. We see that as a 10 to 15 year project. Only then will our commitment and investment pay off. We want to build a long-term and sustainable partnership with our veterinarians for this purpose".

It's a good thing there's finally gonna be a "good vet chain"...

Anicura joins Mars Petcare
Anicura joins Mars Petcare 150 150Sven Jan Arndt
Of:

What reads so harmlessly has immense significance for our industry. While Swedish financial investors disguised themselves as long-term investors with the will to do nothing but good for pets, the mask is now finally falling. After less than 8 years in the market, the financial investors have sold to the Mars Group, one of the largest groups in the food and pet industry besides Nestle.

About Mars Petcare from your own press release:

"These include PEDIGREE® , WHISKAS® , ROYAL CANIN® , NUTRO™, GREENIES™, SHEBA® , CESAR® , IAMS™ and EUKANUBA™ as well as theWALTHAM Centre for Pet Nutrition, which has been advancing scientific research into pet nutrition and health for more than 50 years. Mars Petcare is also the world's largest service provider for veterinary medicine with a network of more than 2,000 veterinary clinics, including BANFIELD™, BLUEPEARL™, PET PARTNERS™ and VCA™. …“

A tendency to monopolize an entire market seems clear if you look at this list.

Der komplette deutsche Pressetext ist hier zu finden: 180611-anicura-schliesst-sich-mars-petcare-an

What does this mean for the veterinary industry?

First of all, the wind that has previously prevailed at Anicura will probably stiffen even more and be trimmed even more in the direction of profit and yield optimization. A Mars has high profit targets and has already attracted attention in the past with one or two scandals(scandal about plastic wedges in chocolate bars etc.).

On the other hand, veterinarians willing to sell should in future better consider to whom they sell. Because the other colleagues on the market such as Evidensia etc. are also profit-oriented financial investors. That these also have an exit in mind in the long term seems obvious.

So if you want to continue to provide your services seriously in the future, free from the pressure of sales targets or return expectations of external financial investors, we think you should carefully consider whether the praised advantages cannot be achieved in any other way and whether the disadvantages even outweigh them.