Captive Strategies in Vet Med: Part 2 - Ownership without owning (#549)

In Part 1 of the series on Captive Strategies in Veterinary Medicine, we looked at the architecture of modern veterinary consolidation.

The legal structures, ownership models, and organizational frameworks that allow corporate groups to control practices while often preserving the appearance of local identity.

But structures rarely exist for their own sake.

They exist because they serve a purpose.

In modern veterinary medicine, that purpose is increasingly financial.

To understand why captive strategies have spread so rapidly, we need to look beneath the legal framework and examine the economic logic that powers it.

Veterinary Medicine as an Asset Class

Private equity firms do not invest in professions. They invest in asset classes.

What they look for are businesses that are:

• Fragmented,

• Cash-generating,

• Resistant to economic downturns

• Predictable in revenue, and

• Capable of scaling rapidly.

Veterinary medicine fits this profile remarkably well.

Demand is steady.

Clients are emotionally invested.

Payment is largely private rather than government controlled.

And historically, practices were independently owned - making them ideal targets for consolidation.

Captive strategies provide the structural foundation.

Financial logic provides the engine.

Multiple Arbitrage: The Core Financial Mechanism

At the center of corporate consolidation lies a concept rarely discussed in veterinary school:

Multiple arbitrage.

The idea is simple  

• Individual veterinary practices are acquired at modest EBITDA multiples.

• These practices are grouped into a larger network.

• The larger network is valued at a significantly higher multiple.

• The network is eventually sold or refinanced at that higher valuation.

The increase in value often comes less from clinical innovation than from scale, predictability, and centralized control.

Veterinary hospitals become not only places of care, but components within a financial portfolio.

And portfolios are valued differently than individual practices.

Standardization: From Medicine to Predictable Earnings

Once practices are integrated into a corporate network, the emphasis often shifts toward predictability.

Corporate systems typically prioritize:

• Centralized purchasing contracts,

• Uniform diagnostic platforms,

• Shared IT infrastructure,

• Standardized HR systems,

• Consistent pricing frameworks, and

• Defined clinical pathways in some areas.

  
  

The goal is not simply efficiency.

It is to reduce variability.

Investors reward predictable earnings streams far more than variable ones, even if both generate similar total revenue.

In financial markets, stability often matters more than excellence.

Time Horizons and Exit Strategy

Most private equity investments are structured around a 5 to 7-year exit horizon.

Within that time frame, investors aim to:

• Increase the size of the network,

• Improve margin performance,

• Demonstrate scalability,

• Show consistent growth trends, and

• Reduce operational variability.

Captive strategies make these goals achievable.

They allow practices to function less as independent businesses and more as standardized units within a system designed for eventual resale.

The hospital may feel local.

But financially, it often sits inside a growth narrative aimed at a future transaction.

How Major Corporate Groups Apply These Principles

To see how these financial and structural principles play out in practice, it helps to look at how the major corporate veterinary networks are actually organized.

Quick Comparison: Corporate Veterinary Structures

Group	Ownership Type	Core Structural Strategy	Visibility of Corporate Identity	Financial Emphasis	Distinctive Feature
VCA Animal Hospitals	Corporate network (owned by Mars)	Full acquisitions + centralized management	Moderate (VCA brand visible)	Predictable revenue, referral ecosystem growth	Integration with diagnostics and specialty hospitals
Banfield Pet Hospital	Corporate network (owned by Mars)	Retail co-location + standardized preventive care model	High (uniform branding and protocols)	Recurring revenue via wellness plans and throughput	Embedded inside major retail distribution system
National Veterinary Associates (NVA)	Private-equity portfolio (owned by JAB)	Local-brand retention + clustering acquisitions	Low (local identity often preserved)	Portfolio value growth and regional market capture	“Quiet consolidation” with less visible corporate overlay
Mars (platform owner)	Global parent platform	Multi-segment vertical integration	Variable across divisions	Long-term ecosystem value	Presence across hospitals, diagnostics, nutrition, and supply chain

 What the Comparison Shows

The details vary, but the underlying logic is remarkably consistent.

Some groups emphasize strong branding and standardized clinics.

Others preserve local identity while integrating financial control.

Some prioritize retail integration, others referral ecosystems or vertical supply chains.

But across all models, one principle holds:

Veterinary hospitals are increasingly being organized not only as medical facilities, but as components within scalable financial systems.

The profession has not simply gained corporate owners.

It has entered the logic of portfolio management.

Why This Matters

None of this automatically diminishes the quality of veterinary care.

Many corporate networks invest heavily in equipment, facilities, and staff support.

Some stabilize practices that might otherwise fail.

Others improve access in underserved areas.

The issue is not whether corporate medicine exists.

It is that financial logic now plays a defining role in how veterinary medicine is structured, expanded, and evaluated.

The language of care increasingly coexists with the language of valuation.

And where valuation enters, incentives inevitably follow.

Closing Reflection

By now, the pattern becomes clearer.

Part 1 showed us the structure beneath the clinic.

Part 2 shows us the engine powering that structure.

But systems are not abstract.

They are inhabited.

In the final part (Part 3) of this series on Captive Strategies in Veterinary Medicine, we turn to the people who now live and work inside this architecture.

Veterinarians, technicians, managers, and clients.

We discuss what these systems mean for the identity of the profession itself.

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