Vet Care: Private Equity Interest Grows During the Pandemic

Vertical: Animal Health
Author: JC Lupis
Date: August 2020

The veterinary services market continues to experience strong rates of consolidation. However, the market is still highly fragmented, with more than 90% of animal care practices remaining independent. A variety of trends – such as the humanization of pets and longer pet lifespans – have resulted in increased pet care spending.

Crucially, veterinary practices have been deemed to be “essential businesses” during the COVID-19 pandemic, with the government effectively ensuring the industry’s recession-proof standing.

As such, while practices have not been immune to the effects of the pandemic, the industry remains poised for further investment and transaction activity.

Private Equity Sees Room for Growth

A recent survey from law firm Katten Muchin Rosenman LLP confirms private equity’s sustained interest in the animal care sector. Among 47 private equity respondents surveyed in May, two-thirds reported that their outlook on animal care has been either very (23%) or somewhat (45%) positively impacted since the pandemic. Moreover, 9 in 10 either strongly (26%) or somewhat (64%) agreed that animal care is an attractive private equity investment target. Eight in 10 expect to see an increase in private equity transactions in the area over the next year.

Increased private equity investment into animal care would continue the prevailing trends: last year private equity accounted for 44% of transactions in the animal health industry, up from 36% the year prior.

Low-Risk Industry Appeals

At the heart of animal care’s appeal is its low-risk nature. Respondents to the Katten survey identified low-risk pipelines as their #1 appeal (of 4 options) Practices’ cash-pay dynamics are also attractive to buyers; the nature of the primary cash business minimizes reimbursement risk.

The appeal extends beyond pipelines and reimbursement, though. Animal care’s resistance to economic cycles was cited as a very important characteristic by 55% of private equity respondents when evaluating an investment. That tied with current market demand as the most oft-cited “very important” factor in the animal care market and environment.

As for demand, respondents cited opportunities for growth as the top catalyst for investment activity in the market, with current valuations and market fragmentation also of interest.

Key Data Points

42: The percentage of private equity respondents who believe that Therapy and Diagnostics will represent the greatest investment opportunity in animal care over the next 2 years.

88: The number of M&A transactions in the animal health industry last year, up from 75 the year prior, and more than double the number from 2013 (43).

Select M&A Transactions



Sources: Capstone Headwaters, GHA Internal Database

For more information, please contact Managing Director JC Lupis at