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What if you could have the financial security of the big box store with the quality and care of the mom-and-pop shop around the corner? It sounds pretty perfect. Amazingly, that is what is happening in much of the veterinary industry today.
According to the American Veterinary Medical Association (AVMA), the veterinary industry consists of nearly 30,000 vet clinics and hospitals, most of which are privately owned. DVMs and practice owners have poured their careers into building successful, compassionate, patient-first vet practices. And that is a beautiful thing.
But if you were to peel back the layers of success, you often find veterinarians overwhelmed by HR, payroll, marketing, equipment upkeep… and the list goes on. Add the labor shortage and it is no wonder that burnout among veterinarians is becoming all too common!
Thankfully, private equity (PE) firms, with all their resources, can step in as capital partners to improve this stressful situation.
How Private Equity is Affecting the Veterinary Industry
First, what is Private Equity?
Private Equity (PE) is money from investors used to further build and improve companies. It is often sourced from wealthy individuals or firms that want to grow their wealth in ways other than stocks, bonds, or real estate. Many PE firms have turned their attention to the veterinary industry in recent years.
As we all have seen, veterinarians have witnessed a boom in their business. The number of pet owners grew exponentially during the pandemic, while people began spending more on their pets in general. More pets plus more money spent on pets equals very busy veterinarians.
Coincidentally, this happened when many DVMs and practice owners were nearing retirement age. Younger veterinarians were graduating with student debt and little interest in handling the administrative tasks of running a practice.
Enter the Private Equity solution. PE firms can buy veterinary practices and allow DVMs to retire comfortably while maintaining the legacy and reputation of the practice. This, in turn, frees up younger vets to focus on administering top-notch veterinary care to their patients. It’s a win-win-win.
The Advantages of Private Equity Investment in Veterinary Services
Any form of acquisition should be advantageous for all parties involved. Thankfully, when done right, the partnership formed between veterinarians, pet owners, and PE firms provides significant benefits for all.
For Practice Owners
- Establish a mutually beneficial partnership: PE firms are looking for the best in the healthcare business and want to support exceptional managers in achieving their goals for their veterinary clinics. The partnership can then be an incredible value-add, as the financial and business investment of the PE firm provides resources and support to the practice.
- Develop a strategic, industry-specific business plan for growth and value creation: Partnering with a PE firm gives DVMs access to some of the best minds to help them effectively plan and implement strategic business models for growth.
- Eliminate roadblocks and streamline systems: Practice owners are passionate about providing the best veterinary care possible for pet owners and companion animals. Yet too often, they get tied up in all the nitty-gritty of running a veterinary hospital and aren’t able to focus on the most meaningful parts of the job. A PE firm provides financial support and resources so managers can more fully focus on day-to-day operations. Not only will veterinarians have the support to think about the big picture, but they will have the resources to make it happen!
- Grow the practice: More than anything, PE firms want to invest in and grow an animal hospital. This might mean that they work to expand the number of vets at your practice, add new services or products, or strategically gain market share.
- Support employees: With a strong support network, a PE-backed clinic can offer employees better professional development and opportunities for career advancement.
- Continue to operate with your clinic’s culture and medical philosophy: Most importantly, a solid PE partnership will allow your unique culture to continue to thrive. Your clinic’s unique flavor and feel make your patients and employees loyal and satisfied. It is the heart of your business and the most critical piece to keep intact.
For Pet Owners
- Maintain the quality of patient care: Pet owners and animal health are (and should be) the highest priority of any veterinary hospital. And all employees, from the receptionist to the DVM, want to provide the highest quality of pet care. And without financial stress, veterinary practices are freed to place pet owners and their companion animals’ well-being above all else.
- Updated systems and processes: With proper funding, clinics can invest in updated systems and processes. User-friendly systems and smoother operations make scheduling appointments, procedures, and the like easier and more accessible.
- Improvements to the space and equipment: All pet owners want their animals to benefit from state-of-the-art equipment when undergoing procedures. When a PE firm invests in a clinic, the equipment and facilities are improved, making it a better experience for all.
With change, there is always risk. And with that comes some real disadvantages. Partner with the wrong private equity firm, and you, as the DVM, might find yourself undervalued. Each PE firm will have different priorities, which could be in conflict with your own.
PE firms are sometimes criticized for having too short of a game plan: they might buy a company, build it up, and resell it in three to five years to make a profit. But this is not always the case.
It is thus crucial to do the hard work of finding a mutually beneficial partnership that will honor your expertise, build upon your legacy, and fully respect you, your staff, and your clinic’s culture.
The AmeriVet Difference
AmeriVet is deeply committed to creating long-term, healthy partnerships with veterinarians and their clinics. Our goal is always to support what has already been established and use our resources only to grow and develop practices.
By partnering with AmeriVet, you’ll gain the benefits of economies of scale while maintaining the unique culture of your practice. This means you’ll keep control of overall operations, play a vital role in growing the practice, and even share in the increased profits. It’s the best of all worlds, and you can’t beat that.