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Scoop: Partners preps Blue River for market

Aug 3, 2022
Illustration of a pet carrier overflowing with money.

Illustration: Aïda Amer/Axios

Partners Group is gearing up for a potential sale of Blue River Petcare, the Chicago-based network of veterinary hospitals, three sources tell Axios.

Driving the news: William Blair is said to have won the sell-side mandate for an upcoming sale process; however, timing has not been determined.

  • A post-Labor Day launch at the earliest is likely, one person speculates.

Details: Sources say Blue River, which now encompasses vet clinics in 30-plus states, is generating around $75 million of EBITDA.

  • That's up significantly from when Switzerland-based Partners Group took over in 2019, when Blue River's adjusted EBITDA was pegged at north of $30 million and TTM EBITDA in the upper $20 million range.
  • The 2019 deal concluded a BofA-led process that valued Blue River at around $440 million to $500 million, sources told Sarah then.

By the numbers: Multiples for vet platforms have trended higher through the pandemic, with general practice vet platforms commanding upper teens to 20x multiples of EBITDA in some cases.

  • The specialty vet players have meanwhile ticked into the mid-20x range.
  • Financing markets remain rocky, but one source expects the "debt markets to remain open for vet."

State of play: While health care spending for pets proved resilient through the COVID-spurred pooch boom, curbing that demand is a labor crisis.

  • A shortage of nearly 15,000 veterinarians will likely still exist by 2030, according to a study published recently by MARS Veterinary Health.

Yes, and: The rapid add-on fueled growth of many vet care platforms has translated to a pronounced gap between actual EBITDA and pro-forma EBITDA.

Between the lines: Up against a volume challenge, PE-fueled consolidation could be a solution.

  • Bigger, sponsor-backed platforms tend to reap benefits like better buying power from distributors, or technology to drive up workflow and scheduling efficiencies.

What we're watching: The flurry of vet companies that have hit the market or hired banks to explore sales this year.

  • North Castle Partners kicked off a sale process for Encore Vet Group earlier this year via Harris Williams, Axios wrote.
  • Cressey & Co.'s People Pets & Vets also hired Harris Williams to find a buyer — with that process said to be in the late stages for some time now.
  • Compass Group Equity Partners engaged Lincoln International to advise on a sale of CareVet early this year, but it's unclear if the business ever formally went to market.
  • Shore Capital Partners hired Goldman Sachs and Jefferies to explore a sale of Southern Veterinary Partners, Mergermarket reported earlier this summer.

The bottom line: Sponsors are continuing to tear into the vet space — but the market's dog days may not be over as myriad factors make for a more difficult dealmaking environment.

Partners declined to comment and Blair did not return requests for comment.

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