People love their pets. After polling bankers about why, as Phil Colaco, CEO of Deloitte Corporate Finance says, “animals are really hot,” and veterinary M&A continues to be a bright spot in a troubled macroeconomic environment.

“At the same time, there is a limited supply of new veterinarians to meet this demand,” comments Doug Bolt, managing director at Deloitte Corporate Finance. “There are only 30 veterinary schools in the U.S., and these schools have not increased their number of graduates. Older, ‘baby boomer’ veterinarian retirement and additional losses of providers during the pandemic created a shortage of veterinary service providers. Combining these industry dynamics with a highly fragment industry has created a very compelling M&A market.”

Other trends affect veterinary M&A too, another banker adds. He noted that a lack of IPOs in a volatile market has caused an uptick this year in companies seeking sales, but technology advances play a part. “There’s been a transference of human medicine to animal medicine. When we were kids, a sick pet was put down. Now they get hip replacement surgery. There’s oncology, magnetic resistance imaging, surgery. The average life expectance of a dog increased from ten to 13 in 20 years.” 
Veterinary technology-enabled services is an intersection of veterinarian and technology services that fetches high multiples, says a second banker. Covetrus, which sells practice management software, prescription management, multi-channel client engagement services and supply chain infrastructure, represents this trend. Clayton, Dubilier & Rice announced it would purchase the 75 percent of the Covetrus it didn’t already own for an enterprise value of $4 billion in May. 

“Vet health has no regulation, no social security, no HIPAA, no insurance companies, no electronic scheduling,” says the second banker. “People spend tremendous money on pets. There’s a gold rush going on, and the space has been hot a long time.” 

-Sarah Cohen