Pulley vs. Carta for a Multi-Hospital Vet Group's Equity

At acquisition, each founding veterinarian rolls a portion of their sale proceeds into equity in the new parent company rather than taking all cash, which keeps them financially invested in the group's future growth. Unlike dental or medical practices, most states don't restrict corporate ownership of veterinary practices the way they restrict human medicine, so the ownership structure here is usually simpler: one parent company, real equity, no separate professional-corporation layer required in most states.

That relative simplicity is exactly why it's tempting to skip formal documentation early on, since there's no regulatory structure forcing the issue the way corporate-practice rules do in human medicine. Resist that temptation. The absence of a legal requirement doesn't make a signed rollover agreement optional; it just means nobody's going to catch the gap for you.

With two rollover stakes and a founding team, Pulley is the right fit: a small cap table, straightforward vesting on the rollover equity, and no need yet for institutional-grade reporting.

By the time the group reaches eight hospitals, it's likely brought in outside capital to fund the acquisitions, added a board, and is issuing rollover equity to new founding veterinarians at each deal. The cap table now has multiple classes, multiple rollover vesting schedules starting at different dates, and investors who expect regular, standardized reporting.

The middle stretch, roughly three to seven hospitals, is where a lot of groups get into trouble, since they're growing fast enough that a spreadsheet is straining but haven't yet formally decided to move to institutional-grade tooling. If the rollover count is climbing and each new deal adds another vesting schedule to track by hand, that's the signal to move early rather than waiting until the eighth hospital forces the issue.

This is where Carta earns its place: consolidated reporting across a growing ownership base, support for the preferred and common share classes an institutional round typically introduces, and the audit trail a board and investors expect to see at each update.

Associate veterinarians, the ones who didn't sell a practice into the group but are core to a hospital's daily performance and client relationships, present a different decision than rollover equity. Most groups use phantom equity tied to a hospital-level or regional EBITDA formula for these grants, since it rewards retention without diluting the rollover veterinarians' or investors' real ownership stakes.

The formula should reflect what an associate can actually influence, case volume, client retention, quality outcomes, rather than factors like regional acquisition activity that sit entirely outside their control. A well-designed formula makes the grant feel earned rather than arbitrary, which matters for retention as much as the dollar value does.

Regardless of size, every rollover or phantom equity grant needs a signed agreement with a clear vesting schedule, and a current 409A valuation (generally one no more than 12 months old that reflects no later material events) should be in place before any stock option is granted to an associate veterinarian or corporate employee. The platform changes as the group scales; the discipline behind the documentation shouldn't.

When a consolidator does several acquisitions in quick succession, it's easy for the rollover percentage, vesting schedule, or valuation methodology to drift slightly from deal to deal, especially if different people on the team negotiated different acquisitions. Founding veterinarians talk to each other, and inconsistent terms across acquisitions, even for defensible reasons like differing practice size or profitability, can create real friction once everyone compares notes. Keep a standard template for rollover terms and document the specific reason whenever a deal departs from it.

Record these terms for every acquisition so rollover deals stay consistent:

• The rollover percentage the founding veterinarian takes in the parent company instead of cash.
• The vesting schedule and its start date, since schedules that begin at different dates are easy to confuse.
• The valuation methodology used at that deal, so later acquisitions do not drift from it.
• A signed agreement for every rollover or phantom equity grant.
• A current 409A valuation in place before any stock option goes to an associate veterinarian or corporate employee.

A hospital's medical director, often the founding veterinarian in an acquired practice or a senior associate at a hospital built organically, sometimes holds a role that blends clinical leadership with informal ownership expectations. As with medical and dental groups, keep any required medical director compensation documented separately from equity, so the two arrangements don't get conflated when someone eventually asks exactly what they own versus what they're paid for the role.