Up to 28 facilities in 10 states, a local veterinarian-led company is on the lookout for vet practices and animal hospitals to become part of Southern Veterinary Partners.
Written by Robert Linscomb
Photography by Edward Badham
The owners of Birmingham-based Southern Veterinary Partners (SVP) have their sights set on rolling up vet practices and animal hospitals throughout the South and beyond, touting the value of a veterinarian-led company that can bring practices under a profitable operational umbrella.
Price, a graduate of Auburn University College of Veterinary Medicine, bought his first clinic in suburban Birmingham in 2010 and now his organization is shopping for veterinary clinics all across the country. The company presently operates in 10 states stretching from Virginia to Texas.
“While the most active area for acquisitions is in the Southeast, we think our message resonates relatively well in the Midwest, too,” Price says. “It’s a pretty similar mindset.”
There are over 5,000 veterinary clinics in the Southeast, according to Price and many of those doctors would prefer to concentrate on providing quality healthcare for their patients and are very willing to cede the business related issues to companies like SVP.
There are several very large companies competing with SVP for buying rights to these veterinary clinics, including a household name that might be surprising.
Mars, Inc., one of the largest privately held companies in America announced this year the acquisition of Veterinary Centers of America (VCA) and its 800 hospitals. Mars already owns Banfield Pet Hospitals, BluePearl Veterinary Partners, and the Pedigree and Whiskas pet food labels. Mars, of course, is most famous for candy bars such as Snickers, Milky Way and Twix.
The massive move by companies like Mars into animal healthcare isn’t that daunting to Price, however.
“They don’t have a lot of business in the Southeast and we are still the only veterinarian-led group looking at these clinics,” Price adds.
SVP is backed by private equity investor, Shore Capital Partners, a healthcare focused group that is looking for long term relationships and have successfully developed investments across the healthcare spectrum. Shore Capital, headquartered in Chicago, and its partners have invested in physical therapy, ophthalmology, urgent care and dental practices all across the country. Justin Ishbia, managing partner at Shore Capital, serves as the chairman of SVP’s board of directors.
The majority of the veterinary clinics that SVP is looking to acquire are owned by veterinarians in the Baby Boomer generation, ages 55-75 years of age. These doctors face the same challenges that many other sole practitioners face – there is no legitimate way to capitalize equity.
“In the asset purchase agreement that is generated when we buy a practice, the majority of assets purchased are capitalized goodwill,” Price noted.
In some cases who gets to buy these practices gives SVP a clear advantage in the marketplace. In four states—Texas, Louisiana, Alabama and North Carolina—only doctors can own medical clinics. Price notes that in order to make a recent acquisition in North Carolina, he had to take exams to become licensed in that state.
According to Price, the market is filled with much larger prospects than they initially anticipated. SVP and its investors originally planned on acquiring practices that were generating $1-1.5 million in revenues. What they found were much larger hospitals, with owners that were willing to listen to the SVP pitch. So, instead of looking at smaller clinics, the group is now actively looking at larger, more profitable clinics.
The options seem murky for the veterinarians looking to sell. They can go the corporate route, changing the name and, potentially the style and nature of the local practice, or they could just sit still and depend on the business for their entire livelihood. Neither option seems particularly enticing to the veterinarians that Price and his team ended up courting. It opened lots of doors for SVP, and lots of opportunity, Price says.
SVP would much rather make a purchase and leave the veterinarian in place, continuing to practice the good medicine that made the acquisition enticing.
It also helps, Price added, to be able to offer great benefits to the staff after an acquisition is made. “We’re able to offer really good benefits, medical, paid time off and even retirement savings plans, and that really helps with the team,” Price says.
With so many veterinary clinics to look at, SVP now has three analysts working on acquisitions throughout the Southeast and into Texas. “We’re not going to buy the ones that don’t practice great medicine,” Price says.
Price says the culture and personality of the animal hospitals may be unique, but the problems never are; they tend to encounter the same problems at every new acquisition.
It helps, too, when the veterinarians become vested in the new ownership structure. Price says that 22 of 25 veterinarians have opted for an ownership stake in SVP. That helps motivate the doctors and helps tremendously with the transition to new ownership, according to Price.
Price and his team are actively recruiting veterinarians to staff the new clinics. His team is forming relationships with several veterinary schools and has hired student representatives at the University of Georgia and Auburn University. These representatives help vet students locate and secure internships and then help SVP focus on recruiting and placement.
SVP clinics are located in states with seven clinics in Tennessee, six in Alabama, three in Florida and Texas, two in Georgia, South Carolina and Virginia, and one in Louisiana, Mississippi and North Carolina.
Just the facts…
The market for veterinary services has consistently increased in size over the past decade, according to the U.S. Census Bureau, reaching approximately $33 billion in total output in 2014. This expansion might be attributable to multiple factors, including: an increase in the number of pets and other domestic animals; regulations enacted by state and federal governments to enhance animal welfare, prevent animal abuse and ensure that all animals receive the care they deserve; the evolution in the value placed on pets by their owners.
Several current trends account for the faster than average job growth in the veterinary industry. According to a recent survey by the American Pet Products Association, the number of households owning a pet has reached nearly 80 million, or 65 percent of U.S. households, its highest level in two decades. This ownership trend has fueled the need for veterinarians and animal care workers. In 2015, Americans spent more than $15 billion on veterinary care services.
At the 30 U.S. Veterinary Colleges, the average tuition and fees have nearly tripled, from $10,549 in 1999 to $28,845 in 2016.