Private Equity Investment in Veterinary Practices
Overview:
Healthcare private equity consolidation has long been a driving force of change within the healthcare landscape, spurred by market inefficiencies, ancillary opportunities, and broader economic headwinds. Since the late 1990s, healthcare private equity investors have partnered with clinically strong providers to create regional and national platforms. Veterinary practices have increasingly become a focal point for these investments, leveraging size and scale to grow in both existing and new markets.
Market Trends:
Private equity first entered the veterinary space in the early 2000s and has seen accelerated interest in recent years. Today, over 20 veterinary private equity-backed platforms actively invest across the country. Despite significant consolidation, approximately 85% of vet clinics remain independent as of 2023, according to Pitchbook Data. This suggests a long runway for further consolidation, driven by the favorable cash pay environment and rising average spend per pet by owners. We anticipate continued acceleration of private equity investment in the veterinary sector.
Investment Drivers:
The Veterinary market presents attractive investment prospects due to its fragmentation, potential for economies of scale, and ancillary revenue opportunities. These practices offer consistent cash flow and growth potential, making them particularly appealing to private equity investors. As a result, private equity buyers are eager to capitalize on these opportunities, especially during times of uncertain investment returns.
Market Activity:
Recent activity in veterinary private equity includes significant consolidations and the establishment of new platforms. Vetcor, backed by Harvest Partners and Cressey & Co., has been the most active consolidator over the past 24 months. In the last year, six platforms have transacted, including the creation of two new platforms: Pieper Veterinary (backed by Chicago Pacific Founders) and VetEvolve (backed by Varsity Healthcare Partners). Other notable platforms include Southern Veterinary Partners (Shore Capital), BondVet (Warburg Pincus), PetVet Care Centers (KKR), and Veterinary Practice Partners (Audax Group). Sponsor-backed capital is expected to continue fueling new platforms and bolt-on investments over the next 12-24 months.
Olympic M&A specializes in guiding veterinary practices through the private equity process, ensuring successful outcomes for our clients. Our comprehensive approach includes:
- Financial Modeling: Developing customized financial models to optimize cash flow and future credit, showcasing ongoing growth initiatives.
- Buyer Mix Strategy: Identifying the right mix of potential buyers, including strategic acquirers and private equity groups, and implementing targeted strategies to engage them effectively.
- Buyer Marketing and Negotiation: Managing buyer engagement, from marketing and bid solicitation to negotiation, to secure favorable terms for our clients.
- Client Positioning: Positioning our clients to attract relevant potential buyers with compelling offers that align with cultural fit, strategy, and alignment.
- Transaction Management: Overseeing the entire transaction process, maximizing leverage with potential buyers to achieve optimal outcomes.
- Deal Negotiation: Leveraging our experience within the veterinary sector, negotiating key economic and structural deal terms to ensure favorable results.
- Due Diligence Facilitation: Facilitating due diligence processes seamlessly, ensuring a smooth transition to closing without disrupting day-to-day operations.
- Maximizing Financial Results: Maximizing financial results for our clients while preserving their clinical autonomy, ensuring a successful and mutually beneficial transaction.
By leveraging our expertise and industry insights, we empower dermatology practices to navigate the complexities of private equity investment successfully.
Explore how these trends can impact your practice and what steps you can take to maximize value and strategic alignment.
