Why Now May Be the Right Time to Sell Your Veterinary Practice

Now May Be the Right Time for Selling Your Veterinary Practice

Veterinary practices have traditionally been locally owned and operated businesses, but the market is changing and undergoing significant consolidation.

Private equity (PE) investment is a major driver of consolidation. PE groups have invested in 20 veterinarian firms over the past 5 years. Substantially all of these PE-backed companies have become acquisition platforms that are pro-actively seeking to acquire additional veterinary clinics.

Why Private Equity Firms Are Buying Veterinary Practices

• Large fragmented market with substantial opportunity for consolidation
  • Estimated 40 billion dollar U.S. market
  • 28,000 animal hospitals and veterinary clinics in the U.S – 90 percent plus are independently owned
• Predictable and growing business
  • Repetitive revenue
  • Sense of pets as family members which correlates to inelastic demand and recession resistance for pet healthcare
  • Growth in pet ownership (~68% of households, up from 33% in 2000) and an attractive industry revenue outlook
  • “Healthcare” with no reimbursement risk
• Perceived competitive advantages via size and scale
  • Enhanced access to veterinary technology and specialized care
  • Efficiencies in office management

The aggressive acquisitiveness of PE-backed platforms has created a mergers and acquisitions dynamic that favors veterinarian practice sellers. Quality sellers will command acquisition interest from a number of buyers, resulting in competition for deals and premium valuations. Acquisition values for veterinarian firms have been in the range of 7-8 times earnings before interest, taxes, depreciation, and amortization (EBITDA).

Examples of vterinary pratice sales in the Richmond, Virginia Area

• Southern Veterinary Partners (Shore Capital) acquired Betty Baugh’s Animal Clinic (Carytown) in December 2017.
• Blue Pearl (Mars) acquiring Dogwood Veterinary Hospital
• Compassion First Pet Hospitals (Quad-C Management) acquired Veterinary Emergency & Specialty Center (Richmond, Midlothian) in July 2016.

Selling a Veterinary Practice: is it the right time for you?

Keiter can help walk you through the process. Based on the more than 250 merger, sale, acquisition, and financing transactions in which our Firm has participated over the past five years, we have a unique understanding of merger and acquisition transactions, both from a structuring and valuation perspective and from the standpoint of evaluating accounting and tax issues relating to these transactions. We have relationships with investment banking and private equity firms throughout the country through our Transaction Advisory Services practice and our membership in the Association of Corporate Growth and Alliance of Merger and Acquisitions.

Contact our Healthcare and Medical Services team for more information. Email | 804.747.0000