The market for veterinary practice acquisitions has typically involved two categories of buyers: other veterinarians, either individuals purchasing their first practice or other owners looking to expand, and large national chains like VCA and National Veterinary Associates (NVA). In recent years, however, a third player has emerged: private equity.
Our white paper titled "The Next Investor in Veterinary Practices" will explore the motivating factors behind private equity investments in the veterinary services industry and the impact on private practice owners. We will also provide our outlook on practice sales for 2015 and 2016. The following are two brief excerpts:
On Private Equity's Interest in Animal Hospitals
The veterinary industry attracts PE investment because it aligns very closely with the investment criteria typically associated with PE funds. It is a stable industry with predictable demand. It grew modestly over the past five years, averaging annual growth rates of 4.5%, but many (including us) believe that growth will accelerate over the next 5-10 years. Pet ownership in the United States is up, with 68% of households owning a pet (up from 56% in 1988). Most veterinary services are private pay, so there is little/no risk associated with third party reimbursement. Finally, the industry is highly fragmented, characterized by a few large operators and thousands of small and medium-sized practices, suggesting that the industry is ripe for consolidation. ...
On the Outlook for 2015-16
... Good practices in attractive markets receive interest from numerous buyers, resulting in bidding wars that drive up prices. This will continue as long as the demand for practices exceeds the supply of practices for sale.
The prospects over the next 12-18 months are very bright, but ...
To download the full white paper, please click here.