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Scoop: VetCor pays $1.1B-plus for PP&V

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Sep 8, 2022
Illustration of a cat with an x-ray view of its stomach revealing a dollar sign.

Illustration: Brendan Lynch/Axios

VetCor's just-announced acquisition of People, Pets, & Vets values the general practice vet care chain just north of $1.1 billion, sources tell Axios.

Why it matters: Despite some slow-moving processes (see below), the market's labor crisis, and rocky financing markets, PP&V's healthy trade demonstrates we're not quite in the dog days of vet care dealmaking.

Driving the news: VetCor, the veterinary services giant backed by Harvest Partners and Cressey & Co, announced its acquisition of PP&V on Tuesday.

  • Interestingly, Cressey was also the majority owner of PP&V — and will remain invested in the combination.
  • The deal concludes a Harris Williams-run auction that also included pure play sponsors, per Axios' April report. Jefferies worked with VetCor.

By the numbers: The deal translates to approximately 19.5x PP&V's real EBITDA of about $55 million, sources say.

  • Fully adjusted EBITDA was marketed at about $80 million, sources said previously.
  • PP&V encompasses 150-plus animal hospitals throughout the western and southern U.S.

Yes, and: PP&V's sale multiple is consistent with relevant sector trades.

  • Deal multiples for general practice vet groups — ticking higher through the pandemic-fueled pet boon — have recently commanded upper teens to 20x multiples of EBITDA in some cases.
  • Specialty vet groups have fetched as much as 25x EBITDA.

Of note: Merrick Axel, a lead partner on both Cressey's VetCor and PP&V deals, joined Varsity Healthcare Partners as partner and head of a new Chicago office, after 16 years at his prior firm, per a Thursday news release.

What we're watching: Whether PP&V's trade gives other buyers and sellers more confidence to pursue a transaction amid today's turbulent financing market.

  • Namely, Partners Group this summer mandated William Blair for a potential sale of Blue River Petcare, the Chicago-based network of veterinary hospitals, Axios wrote in August.
  • Timing was not clear, but one source speculated then that a post-Labor Day launch at the earliest was likely.

Yes, and: what happened to Encore Vet Group, CareVet and Southern Veterinary Partners?

  • North Castle Partners kicked off a sale process for Encore earlier this year via Harris Williams, Axios wrote.
  • 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 SVP, Mergermarket reported earlier this summer.

Meanwhile, VCs are increasingly looking to take a slice of the large and growing market, which private equity has historically dominated. In the last two weeks alone:

The parties declined to comment.

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