Dogged Disruption: PE Pounces on Pet Platforms

“It’s a segment that certainly is going through the early innings of a consolidation wave,” Mohler says.

Mosaic and Mohler can only hope this consolidation continues. While the fragmented pet services segment lures investors, pet industry M&A activity in general has slowed following the huge Covid growth period, when countless people adopted furry companions. Many buyers and sellers expected 2024 to be a bounceback year compared to a bland 2023, but that simply didn’t happen, says Tom Elliott, managing director of Capstone Partners, an investment bank in Boston. In 2024, M&A activity in the sector dropped to 96 announced or completed transactions in the U.S. and Canada, compared to 128 in 2023, Capstone reported in its March 2025 Pet Sector Update. Many of these were add-on deals to established platforms. Strategic buyers generated 54 percent of the transactions.

“There’s no doubt that the number of deals has gone way down in the last few years,” echoes Carol Frank, managing director of BirdsEye Advisory Group, a Boulder, Colo., M&A advisory firm for the pet industry. “Sellers didn’t want to sell their businesses for lower valuations, so they put things on pause.”

And 2025 so far has dimmed expectations. “I had a lot of optimism coming into the year, but it’s not quite as strong as I had hoped,” says Logan Bohlender, a director at SDR Ventures, an investment bank in Greenwood Village, Colo.

Competition in the broad pet space also remains fierce, making dealmaking difficult. “The secret is out, and the pet industry is on everyone’s radar,” Bohlender adds. “Every private equity firm wants to have a pet platform.”

Now, with President Trump’s proposed tariffs, new headwinds have emerged, particularly for segments like pet toys, bowls, leashes and other products made overseas. “If this doesn’t get resolved pretty quickly, there will be companies going out of business,” Frank predicts.

The Upside

But it’s not all gloom and doom. Despite inflation, high interest rates, competition and in some cases over-consolidation, the resilient pet sector still attracts buyers who love its recurring revenue and loyal customer base. “If you get treats or toys that your dog loves, you’ll keep buying them,” Bohlender says. “And if you have a Doodle that needs to get groomed every month, from an investor standpoint that’s a sticky investment model.”

Last year about 45 percent of U.S. households owned a dog and about 32 percent owned a cat, the American Veterinary Medical Association reported. This year, total U.S. pet industry expenditures could reach $157 billion, according to the American Pet Products Association. PE firms are also sitting on dry powder, which needs to be used.

Generation Z, the population born from 1997 to 2012, is largely fueling the growth and shifts in the pet industry. These young people wait longer to have children, or opt not to have them at all. Instead, they adopt a pet, notes SDR Ventures in its 2H 2024 Deal Hound report. Many buy their pets healthy food and supplements.

Escalating veterinary costs have also propelled the pet insurance space. According to Grand View Research, the global pet insurance market was valued at more than $18 billion in 2024, with an expected CAGR of almost 18 percent between 2025 to 2030. About seven million pets were insured in North America at the end of 2024, a 12 percent jump from 2023, the North American Pet Health Insurance Association reported.

“If you have a Doodle that needs to get groomed every month, from an investor standpoint that’s a sticky investment model.”

Logan Bohlender
SDR Ventures

What’s Hot?

Several pet industry segments remain trendy. “Private equity has been circling our space,” admits Mohler about the pet services sector. Last September, Access Holdings Management Company’s pet platform, WagWay Group, invested in boarding service provider PUPS Pet Club, which operates in New York and Chicago.

“I talk with PE investors all the time that really want to get into grooming, boarding, doggy daycare, training,” notes Bohlender. However, these PE firms want at least $10 million of Ebitda for a platform, and not many businesses like that exist, he notes.

Bohlender has also seen an uptick in interest in cat-related companies. “Where there’s less competition there’s more opportunity, especially in times when people feel pricing pressures,” he says. “It’s cheaper to maintain a cat than a dog.”

Other sectors have also spawned deals. In April, health and wellness company Food Science, backed by Morgan Stanley Capital Partners, bought the Natural Dog Company, a North Carolina maker of supplements, wrinkle balm for bulldogs and other products. And in October, New York investment firm Bansk Group bought PetIQ, an Idaho-based manufacturer of health and wellness products for pets for $1.5 billion. The pet supplement industry alone is projected to reach $1.05 billion in 2027, reports St. Louis middle-market investment bank R.L. Hulett in its Q4 2024 Pet M&A Update.

Buyers are also still eyeing premium pet food and treats companies, such as those in the freeze-dried space. Ultra-processed food has lost its luster with consumers. “I would not want to have a kibble company right now,” Frank says.

Veterinary clinic rollups also continue “but in general we’ve seen a pullback,” notes Trevor Hulett, managing director of R.L. Hulett. Last year, Senators Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.), accused JAB Holding Company, a Luxembourg PE firm that has snapped up numerous veterinary chains, of “looting the profits while reducing quality of care, increasing prices for pet owners, and making working conditions even harder for veterinarians,” according to a press release put out by Warren’s office in August 2024.

But despite this ruckus, consolidation won’t stop. “There are enough PE platforms out there to keep the ball rolling,” Elliott says. He anticipates the number of vet clinic deals to mirror 2024. Just late last year, Connecticut PE firm L Catterton invested in WeVets, a Brazil-based veterinary hospital group.

Cross-border deals like this are also occurring, though U.S. companies are often the targets. Last October, Canadian company Pure Treats, acquired U.S. pet food makers Bar W Foods & Eighteen Below Partners LLC, APPA reported. BirdsEye Advisory Group advised the sellers.

All of this makes for a spirited arena, as PE firms and strategics troll for deals. “It’s competitive to find quality deals and win them, frankly,” Hulett states.

What’s to Come

This year could be good or bad, depending. “M&A activity is going to be very slow this year until we have more clarity on the tariff front,” predicts Leigh Randall, managing partner at Topspin Consumer Partners, a private equity firm in Mamaroneck, N.Y. “That’s not to say deals won’t happen, but there will just be a lot less of them.” In January, before the tariffs were announced, Topspin’s portfolio company SportPet Designs of Waukesha, Wisc., announced it had purchased Mammoth Pet Products, a California-based maker of premium dog toys.

With inflationary pressure, experts also question if consumers have a threshold in terms of how much they will spend on their pets.

Frank notes “2025 does not look robust in any shape or form,” though he says the second half of the year could be busy, depending on tariffs and interest rates. Hulett expects PE deals to pick up in the second half and calls the tariffs “a temporary blip”.

This blip so far has only curbed enthusiasm. Elliott speaks regularly with sellers and buyers, including PE groups considering investments in various pet segments. “Nobody can decide what impact the tariffs are going to have,” he says.

Most PE firms remain positive. That’s definitely the case with Mohler, whose investment in the space, Best Friends Pet Hotels, won’t be directly impacted by tariffs unless pet owners decide not to travel.

“Households have factored their spend into their pets and so we remain bullish for this year and other years,” Mohler says.