Illustration: Aïda Amer/Axios
People Pets & Vets, a Cressey & Co-backed chain of animal hospitals, is exploring a sale, sources tell Axios.
Why it matters: Private equity-driven consolidation in the sector is aimed at helping vets spend more time providing care, and not administrative tasks.
Details: Harris Williams is advising on a sale process, which encompasses both larger strategic platforms and pure-play sponsors.
- Initial indications of interest have been submitted and conversations with potential buyers are underway, sources say.
- Approximately $80 million of fully adjusted EBITDA is marketed for the veterinary services company, sources say.
- Deal multiples for general practice vet groups are trading around the upper teens to 20x EBITDA, while specialty platforms are fielding as much as 25x EBITDA.
What's happening: Like most other vet care plays where platforms are growing rapidly via add-on acquisitions, there's a significant gap between actual EBITDA and EBITDA that accounts for M&A growth in the pipeline. Translation: What buyers give credit to and ultimately underwrite is TBD.
- Based on the high teens to 20x-plus EBITDA multiples at which other vet companies have traded, that suggests a deal could value People, Pets & Vets up to some $1.5 billion.
- Olympia, Washington-based People, Pets & Vets encompasses more than 130 hospitals in the Western, Southern and Southeast U.S.
🐈 State of play: Investor exuberance for pet health isn't a new phenomenon, but the level of dealmaking, and valuations, have trended higher through the pandemic.
- In other brewing activity, Axios wrote in early March that Compass Group Equity Partners' CareVet was readying a sale via Lincoln International.
- North Castle Partners' Encore Vet Group kicked off a sale process as well, but sources say that situation is to a certain extent on hold.
Yes, and: High-profile bets last year included two big wagers in specialty vet by JAB Investors' NVA: Ethos Veterinary Health at an around $1.45 billion valuation and SAGE Veterinary for up to $1.25 billion, sources said then.
- L Catterton in December invested in Alliance Animal Health, a general practice vet chain, at a $750 million to $800 million valuation, based upon $39 million of EBITDA, Axios wrote.
- Meanwhile, Shore Capital's Mission Veterinary Partners came to market last year but did not trade.
- The Vets, Bond Vet, Modern Animal and Small Door Veterinary have all the while scored venture or growth capital in the last year.
🐕 Reality check: Pet health care spending is on the rise as people buy more pets, but like human medical care, veterinarians are also witnessing a labor crisis.
- Private equity-driven consolidation in the sector is aimed at helping vets spend more time providing care, and not administrative tasks.
- Bigger chains typically enjoy better buying power from distributors, for example, along with access to operational support services like accounting, educational training, or technology for efficient scheduling and workflow.
Cressey, the company and Harris Williams did not return requests for comment.