Gryphon nears deal for Heartland Veterinary Partners

The pending deal for the Chicago company concludes a William Blair-run process

San Francisco’s Gryphon Investors has agreed to acquire Heartland Veterinary Partners, PE Hub has learned.

The pending deal concludes a William Blair-run sales process for the Chicago veterinary support organization, two people familiar with the process said. The deal would provide an exit for Heartland’s existing PE owner, Chicago’s Tyree & D’Angelo Partners.

The transaction, initially disclosed in an HSR notice on the FTC website, is valued at approximately 20x, a third person said.

This person and another placed the company’s Ebitda at sub-$20 million. A third said Heartland marketed $17 million in 2019 Ebitda, adjusted to $20 million when accounting for the company’s M&A pipeline.

Based on that range, it would suggest Heartland commanded an enterprise value around $350 million to $400 million.

Led by CEO George Robinson, Heartland provides affiliated veterinarians with non-clinical business support services such as provider recruitment, marketing, procurement, billing, accounting and IT. The company partners with veterinary practices throughout 20 states, according to its website.

Robinson prior to Heartland held various management roles at National Veterinary Associates and Banfield Pet Hospital.

The anticipated deal for Heartland comes as the veterinary care industry continues to command tremendous interest and premium valuations from the private equity community.

In brewing activity, Morgan Stanley Capital’s Pathway Vet Alliance engaged Jefferies, Harris Williams and Morgan Stanley Investment Banking to advise a dual-track sale and IPO process, PE Hub reported in September.

Based upon the high-teens-to-20x-Ebitda multiples at which recent vet care assets have traded, MSCP in a potential sale would likely seek a valuation as high as $3 billion, PE Hub reported.

In recent vet care activity, L1 Health in October said it would acquire Destination Health, a Denver provider of both pet health and wellness, committing $450 million to the newly launched platform in the US and Europe.

Elsewhere, JAB Investors in February unexpectedly outbid financial sponsors to take home the win for Quad-C’s Compassion-First Pet Hospitals.

At an enterprise value of about $1.2 billion including post-closing tax benefits, the price tag for Compassion-First topped the 17x to 19x range at which precedent transactions had traded, PE Hub reported.

JAB, which invests on behalf of Germany’s Reimann family, subsequently bought National Veterinary Associates in a June transaction said to equate to a $5 billion-plus valuation. The deal marked an exit for Ares Management and OMERS Private Equity.

Partners Group in July invested in Blue River PetCare in a deal valuing the Chicago veterinary hospital operator north of $440 million, PE Hub reported.

Gryphon, Heartland and William Blair did not return requests for comment on Tuesday.

Action Item: Check out Gryphon’s latest Form ADV: