Shore Capital’s Mission Veterinary Partners explores sale

Shore Capital Partners is evaluating a sale of Mission Veterinary Partners as demand for medical care for pets shows no indication of slowing, according to multiple sources familiar with the matter. 

Jefferies has been engaged to advise on the potential sale, the people said. 

In partnership with Chicago-based Shore Capital, MVP was formed in 2017 by entrepreneurial veterinarians Vic Dhillon and Jeff Rothstein through the merger of their two groups – Advanced Animal Hospital Group and Progressive Pet Animal Hospitals. 

Formerly known as Midwest Veterinary Partners, the company’s network of general practice animal hospitals provides wellness exams, senior pet care, vaccinations, oncology, ophthalmology, surgery, nutritional counseling, allergies and dermatology, and microchipping. MVP is led by CEO Michael Aubrey, the former CEO of StatLab Medical Products (now a portfolio company of Linden Capital and Frazier Healthcare Partners). 

MVP has grown nicely under Shore and is well-run by its management team, but like other vet players, its rapid and successful M&A-driven growth playbooks adds complexity in valuing the company, sources said. “The issue they have is the same issue everyone has,” one person commented. 

The Detroit-headquartered company is marketing an adjusted pro forma EBITDA figure of some $150 million to $160 million, accounting for its acquisition pipeline and letter of intent add-ons that are not yet in contract, the sources said. Potential suitors are likely to underwrite an EBITDA figure closer to the $100 million to $120 million zip code, some of the people said.

“They will get some credit for the pipeline, not all,” one source said, speculating the asset commands a mid-20s multiple off of “somewhere between $100 million and $150 million of EBITDA.” Another source predicted MVP would trade hands in the high-teens to low-20s EBITDA multiple range. 

An acquisition-driven playbook has already fueled significant growth at MVP, with its M&A track record suggesting that add-ons they are acquiring are being done at around 15x EBITDA, one of the people said. 

The company in 2021 surpassed 190 vet hospitals, up from 22 in 2017. It now has more than 4,000 team members, up from 350, all the while it has grown its footprint to 28 states, from three, over the corresponding period, according to the company’s website. 

Regardless of the EBITDA debate, MVP during the last four years has achieved substantial earnings growth. It generated around $20 million of EBITDA at the end of 2019, one person said. 

A sector long touted for its recession resilience, vet care has consistently commanded big, and rising, valuations. Investors participating in the sector span those who take a long-life mindset like OMERS Private Equity, traditional mid-market PE firms and large buyout funds ranging from Morgan Stanley Capital Partners to KKR, and increasingly, growth- and tech-oriented investors such as Silver Lake and Warburg Pincus.

With pet adoptions on the rise and the durability of the space proven out, investor exuberance has only accelerated through the pandemic. “Demand is nonstop,” in vet care, one of the people said. The challenge: “There are only so many vets in the industry.”

The process for MVP follows recent notable trades on the specialty vet side, where such assets – benefiting from scarcity value – typically command a premium over general practice platforms. 

In August, National Veterinary Associates, backed by the Reimann family’s JAB Investors, plunged deeper into specialty vet care with the acquisition of Ethos Veterinary Health at an enterprise value of $1.65 billion, sources told PE Hub. That implied a more than 27x multiple of its marketed adjusted EBITDA of about $60 million. 

Just weeks earlier NVA bought a similar, slightly smaller specialty vet care asset, SAGE Veterinary Care. The June deal, providing an exit for Chicago Pacific Founders, commanded an enterprise value of $1.1 billion off of approximately $50 million of EBITDA, sources said.

More recently, Warburg Pincus earlier this month injected $170 million into Bond Vet, an innovative startup looking to modernize the traditional veterinary care market with a model not unlike a CityMD for pets.

Shore Capital, MVP and Jefferies declined to comment.