Driven by market inefficiency, ancillary opportunity, and broader economic headwinds, healthcare private equity consolidation has been a leading force of change within healthcare for over a century. Starting in the late 1990’s, the primary entity behind this consolidation has been outside investors specifically, healthcare private equity investors, looking to partner with clinically strong providers and create regional and national platforms. Leveraging size and scale, these private equity funds invest alongside providers in medical specialties such as veterinary practices to help grow in existing and new markets.
Healthcare private equity first entered the veterinary space in the early 2000’s and has only accelerated in recent years. Today there are more than 20 veterinary private equity backed platforms actively investing across the country. Despite this level of consolidation, roughly 85% of vet clinics remain independent as of 2023 according to Pitchbook Data, signifying a long runway of consolidation ahead. Given the favorable cash pay environment and an overall increase in average spend per pet by owners, we anticipate continued acceleration of private equity investment in the space.
The most active consolidator within veterinary private equity over the last 24 months has been Vetcor (backed by Harvest Partners and Cressey & Co.) The last 12 months has seen six platforms transact including the creation of two new platforms in Pieper Veterinary (backed by Chicago Pacific Founders) and VetEvolve (backed by Varsity Healthcare Partners). Our healthcare investment banking team at PGP anticipates continued sponsor-backed capital to fuel new platforms and bolt-on investments over the next 12-24 months. Notable other platforms include Southern Veterinary Partners (Shore Capital), BondVet (Warburg Pincus), PetVet Care Centers (KKR), and Veterinary Practice Partners (Audax Group).
The Physician Growth Partners healthcare investment banking team has successfully guided hundreds of independent healthcare providers through private equity processes, with a strong focus on helping our clients find a partner that will set the practice up for long-term success in their healthcare private equity journey.
Our team at PGP focuses on a number of key areas to ensure our clients are successful in the pursuit of a veterinary private equity partner:
- Develop the appropriate financial modeling to position maximized cash flow and future “credit” for ongoing initiatives that are driving growth
- Determine the right mix of potential buyers (including both strategic acquirers and private equity groups) and implement a strategy to reach them
- Managing buyer marketing, bid solicitation, and negotiation
- Position the client to meet relevant potential buyers with strong offers that address cultural fit, strategy, and alignment
- Manage the transaction process to maximize leverage with potential buyers
- Assist client in running a full due-diligence process on buyers to ensure the best partner is selected
- Negotiate key economic and structural deal terms, leveraging PGP experience within the Provider-Led healthcare services space
- Facilitate all pre-closing due diligence to ensure a seamless process that does not take away from the day-to-day business while ensuring the highest probability for a successful close