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Stephen Hughes/The Globe and Mail
Jordyn Hewer had a plan: Go to veterinary school, get a decade of experience under his belt and then buy his own practice.
The first two steps went off without a hitch. He graduated from the University of Montreal’s veterinary school in 2011. He spent the next 10 years working as a small-animal veterinarian in private practices and shelters in Quebec and Ontario.
But it’s when he got to the third step – buying his own practice – that he ran into a serious problem. In the intervening years, the whole industry had changed.
Major corporate players had entered Canada’s veterinary industry, including VetStrategy – backed by U.S. private-equity firm Berkshire Partners, and recently merged with European pet-care chain IVC Evidensia – and VCA Canada, owned by international confectionery giant Mars Inc. The corporate chains were buying up independent veterinary practices, sparking bidding wars that saw the price of vet practices balloon from three or four times annual gross earnings to 10, 20, even 30 times that at the beginning of this year.
The buyouts meant multimillion-dollar paydays for veterinarians who already owned a practice. But for ambitious young professionals like Dr. Hewer, there was no way to compete. Even if he could somehow secure the funding to buy a practice at the prices they were now going for, he would be saddled with a mountain of debt he would struggle to pay off.
“It’s ridiculous,” said Dr. Hewer, who chose to leave the industry to work for a pet-food manufacturer. “When you translate that to how much debt that represents and how much you would need to pay that back in, let’s say, a five- to 10-year period, the numbers never add up.”
Fuelled by international private equity funds, consolidating firms have been on a tear in other health-professional fields as well, buying up practices in fields such as veterinary medicine, dental care, optometry and pharmacies and assembling them into chains. Practitioners who sell to corporate owners typically get back-office support through the firm’s technology and staff, help with marketing, and reduced management responsibilities. The buyers, meanwhile, get businesses with steady streams of revenue, and profits that can be boosted by centralizing equipment and administrative functions, and ordering supplies in bulk. In the vast majority of cases, the old branding remains intact after a purchase happens, so patients and customers have no idea their once-independent practice has been taken over by corporate ownership.
Consolidation within these fields is still relatively low in Canada, but it is building fast – in less than a decade, nearly a quarter of vet practices have been bought by corporate owners.
“I’ve never seen anything like it,” said Douglas Jack, a leading veterinary lawyer at Borden Ladner Gervais LLP. “I’ve been practicing law for 37 years. It just became a frenzy among the consolidators.”
The recent acquisitions are part of a wave of increased activity from private-equity firms across the globe, as they search for new fields to generate
