This report summarises the key themes driving the UK veterinary sector, alongside the impact these are having on mergers & acquisitions activity across the market.
A PDF copy of the report can be downloaded below.
With around 35 million pets in the UK, the veterinary market continues to grow, driven by increased pet ownership, trends of pet humanisation, and pet owners’ preferences for high quality care
There remains a staffing challenge within the sector, caused predominantly by Brexit, as well as vets reducing working hours or altogether leaving the profession
The net number of veterinary surgeons joining the UK profession has drastically fallen from 1,180 in 2019 to 268 in 2021
Unlike the NHS, equipment, medication and business costs are not subsidised in any way within the veterinary sector, meaning vet fees are not standardised, with prices reflecting individual practice overheads and staff costs
Inflation has resulted in higher vet fees to cover these costs and maintain margins, however this has not discouraged pet owners visiting the vets, with only 7% of pet owners reporting cutting back on vet visits
The market has seen significant consolidation in recent years, however intervention from the CMA has impacted some larger deals and will continue to stifle activity going forward
Growing Pet Population
The Covid pandemic had a sustained impact on how people live and work, with increased time spent at home facilitating pet ownership, in turn leading to a larger pet population
To support the growing pet population, there have been advances in scientific research and vet care, including surgical and diagnostic imaging procedures and new drugs, contributing to market growth and the increased desirability of the sector to investors
The ongoing trend of ‘humanisation’ of pets has resulted in 91% of pet owners seeing their pets as part of the family, amplifying the demand for high quality healthcare at all stages of a pet’s life
Pets now also have increased life expectancy due to improved dietary offerings and access to a broader range of clinical treatments, such as specialist diagnostic imaging and telemedicine
The pet population surge is driving the market, not only in the short term with puppies and kittens requiring initial check-ups and vaccinations, but also in the long term as animals become older and may need more veterinary intervention
This will drive future revenue growth and encourage the vet market to remain highly resilient
Staffing & Retention
There remains a shortage of veterinary professionals in the UK, with the sector facing difficulties in recruitment and retention
There has been a drop of two thirds in new EU vet registrants coming to work in the UK, largely impacted by Brexit
The UK’s vet workforce is highly reliant on EU registrants, with RCVS data indicating that 29% of the total existing workforce graduated in the EU
90% of veterinary nurses said they had seen an increased caseload during the pandemic due to new animal ownership, with 66% experiencing conflict between their personal wellbeing and professional role
With a vet’s role being both physically and emotionally demanding, this has resulted in many staff working on a part time basis, or leaving the sector altogether
In 2021, 45% of vet surgeons leaving the RCVS register had been in the profession less than 5 years, with 21% leaving the register within a year
Previously there was a manageable staff turnover within the sector, however the additional pressures from a rise in the number of pets, less EU vets to fill vacancies, and more vets working on a part time basis, have developed a continually growing recruitment challenge
Veterinary M&A Overview
The veterinary sector has seen significant consolidation over the last decade, with 45% of practices now independently owned versus 89% in 2013
This rapid consolidation has been driven by the “Big 6” largest corporates in the market, who have looked to gain market share and seek multiple arbitrage through the acquisition of numerous single practices and small groups
The CMA’s recent intervention into the sector has calmed the buying frenzy somewhat, with an increased focus on the impact on local competition for future transactions. As a result, the number of potential acquirers for independent practices has reduced, with the Big 6 wary of seeking acquisitions where there is a risk of CMA involvement – specifically where the transaction would result in the share of full time vet surgeons in the relevant catchment exceeding 30%
This has had the knock on impact of softening valuations in 2022/23, particularly when combined with ongoing staffing pressures across the industry
Nevertheless, these large corporate acquirers are still actively seeking quality practices in geographical areas where they have no existing presence. The impact of the CMA’s intervention on the major corporates also leaves the door open for a new acquisitive platform to enter the market, which we expect to see in the next 12 months
Selling Your Veterinary Practice Or Group?
If you are considering selling your veterinary practice or group, we would be happy to produce a complimentary valuation report for your business. As a team of chartered accountants, we take a granular view on valuation, analysing the ways in which performance can be presented to achieve the optimum price.
Please get in touch by emailing firstname.lastname@example.org for an initial conversation.
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