The Business of Compassion (Part 2 of 6): When Compassion Becomes an Investment (#775)

PetSmart, Private Equity, and the Financial Value of the Human-Animal Bond

In Part 1 of this series, When Pets Became Big Business, we followed the transformation of PetSmart from a modest pet-food warehouse in Phoenix, Arizona, into one of North America's largest pet-retailing enterprises.

Part 2 will examine PetSmart's acquisition by private equity, the financial interests of BC Partners and Apollo, the Chewy transaction, and the implications of investor ownership for animal welfare, employees, consumers, and veterinary professionals.

PetSmart’s success reflected a profound change in our relationship with companion animals.

Dogs and cats were no longer simply pets.

They had become members of the family.

Their owners increasingly sought specialized nutrition, grooming, boarding, training, and sophisticated veterinary care.

PetSmart recognized the commercial opportunities created by this growing emotional attachment.

But another group of people was paying attention.

Financial investors.

As the companion-animal industry expanded, investment firms began recognizing that the human-animal bond represented something more than an opportunity to sell pet food and services.

It represented a remarkably attractive financial asset.

The reasons were straightforward.

People continued feeding and caring for their animals during economic downturns.

Pet ownership generated recurring expenditures.

And the increasing tendency to treat animals as family members encouraged spending on products and services that previous generations might have considered unnecessary.

The industry appeared to offer a desirable combination of predictable revenue, customer loyalty, and long-term growth.

For private equity investors, these characteristics were particularly appealing.

And in 2015, PetSmart became the subject of one of the largest private equity acquisitions in American retail history.

The $8.7 Billion Acquisition

In December 2014, PetSmart announced that a consortium led by the international investment firm BC Partners had agreed to acquire the company for approximately $8.7 billion.

The transaction was completed on March 11, 2015.

Shareholders received $83 per share in cash, representing a substantial premium over the company's earlier market valuation.

The acquisition consortium included BC Partners, Caisse de dépôt et placement du Québec, StepStone, and Longview Asset Management.

PetSmart ceased trading on the NASDAQ stock exchange and became a privately owned company.

This was a fundamental change.

Previously, PetSmart had been accountable to public shareholders and subject to extensive securities reporting requirements.

Its financial performance, executive compensation, corporate risks, and major transactions were disclosed through publicly available documents.

Private ownership changed those arrangements.

The company remained subject to applicable laws and regulatory requirements, but it was no longer required to provide the same comprehensive public financial disclosures.

For a business whose activities affect millions of animals, customers, and employees, this reduction in transparency is significant.

Private ownership does not imply dishonesty or misconduct.

But it does mean that independent observers have fewer opportunities to examine how financial decisions are made and whose interests are prioritized.

The distinction between legal compliance and public accountability is important.

A company may comply with every applicable disclosure requirement while still revealing relatively little about its internal financial decisions.

What Is Private Equity?

Private equity is frequently discussed in connection with veterinary medicine, but the term is not always well understood.

In simple terms, private equity firms collect capital from investors and use that money to acquire ownership interests in businesses.

Their investors may include pension funds, insurance companies, university endowments, sovereign wealth funds, and wealthy individuals.

The objective is generally to increase the value of acquired businesses and eventually generate financial returns.

Private equity firms may accomplish this through several strategies.

They may improve management, introduce technology, expand services, acquire competitors, reduce costs, or restructure operations.

They may also use borrowed money to finance acquisitions.

This is known as a leveraged buyout.

Consider a simplified example.

An investment group purchases a business for $1 billion, contributing $400 million of its own capital and borrowing $600 million.

If the business subsequently increases in value to $1.5 billion, the investors may achieve an attractive return on their original investment.

However, the acquired business must also manage the obligations associated with the borrowed money.

Debt requires interest payments and, ultimately, repayment or refinancing.

These financial obligations can influence decisions about staffing, investment, pricing, and operating costs.

The example is illustrative, not a description of PetSmart's precise financing arrangements.

PetSmart's acquisition did involve debt financing, but determining its subsequent financial consequences would require detailed examination of the company's capital structure and financial performance.

The essential point is that private equity ownership introduces financial expectations that may differ from those of a traditional independently owned business.

A family-owned company might be content to generate a sustainable income over several generations.

A private equity investor generally expects the value of its investment to increase sufficiently to justify the capital committed and the risks assumed.

Neither model is inherently unethical.

But the incentives are different.

Why PetSmart Was So Attractive

The explanation can be found in the economics of pet ownership.

Unlike many consumer purchases, spending on companion animals is frequently recurring and emotionally important.

A family may postpone buying a new television during difficult economic times.

It is less likely to stop feeding its dog.

A cat may require prescription medication regardless of prevailing economic conditions.

A dog may need grooming, vaccinations, or treatment for chronic disease.

These expenditures create relatively dependable commercial demand.

The increasing humanization of pets adds another dimension.

Owners who consider animals members of the family may be willing to purchase premium foods, specialized products, and additional services.

In its July 2023 announcement concerning a new investment by Apollo, BC Partners explicitly identified increasing pet ownership, greater spending per pet, and growing attention to animal wellness as important factors supporting PetSmart's commercial prospects.

The announcement also emphasized the company's profitability and cash-flow generation.

These observations reveal the investment rationale.

The emotional relationship between people and animals had become a source of predictable financial value.

There is nothing inherently objectionable about recognizing that opportunity.

Businesses must generate revenue to survive, employ people, and provide services.

But it is worth considering the implications when the commercial value of an industry depends so heavily upon affection, responsibility, and concern for living animals.

A customer purchasing a television can generally decide to postpone the purchase.

An owner whose dog requires treatment for a painful condition may have far less freedom to defer expenditure.

This difference becomes especially important when financial investors expand beyond pet retailing into veterinary healthcare.

Enter Apollo: Another Financial Investor

In July 2023, PetSmart announced that funds managed by Apollo Global Management would make a strategic equity investment in the company.

Apollo is a major international alternative investment firm with activities encompassing private equity, credit, and other financial strategies.

The transaction provided an opportunity for BC Partners and its existing co-investors to realize some of the value of their investment while retaining majority ownership and control of PetSmart's board.

The announcement was revealing.

The investors emphasized PetSmart's strong commercial position, recurring customer relationships, profitability, and opportunities for further expansion.

They also highlighted the company's combination of physical stores, online shopping, grooming, training, and veterinary services.

This combination is commercially powerful.

A business that sells products and provides services can develop relationships with customers extending throughout an animal's life.

The company's loyalty programs and digital platforms provide additional opportunities to understand purchasing behavior and encourage repeat business.

In 2023, PetSmart reported more than 62 million loyalty-program members.

The financial value of such relationships should not be underestimated.

PetSmart was no longer simply a chain of retail stores.

It had become an extensive commercial network connecting pet owners with products, services, and increasingly, healthcare.

According to BC Partners, PetSmart's revenues had increased by more than 40% during the period of its ownership preceding the Apollo announcement.

This was presented as evidence of successful investment and management.

And from a financial perspective, it was.

But revenue growth alone does not tell us whether employees are better treated, whether customers receive better value, or whether animal welfare has improved.

Those outcomes require separate evaluation.

Chewy: A Multibillion-Dollar Bet on the Future

One of the most significant decisions made under private equity ownership was PetSmart's acquisition of Chewy in 2017.

Chewy had developed a rapidly growing online business selling pet food, medications, and supplies.

Its business model emphasized convenience, customer service, and recurring purchases.

The acquisition, valued at approximately $3.35 billion, dramatically expanded PetSmart's presence in e-commerce.

It also demonstrated the extraordinary financial value of customer relationships in the companion-animal industry.

Chewy did not manufacture most of the products it sold.

Its principal asset was its ability to connect pet owners with products they purchased repeatedly.

A customer who regularly orders dog food may continue doing so for many years.

That recurring relationship creates commercial value far beyond any individual purchase.

Chewy subsequently became publicly traded in June 2019, and its ownership structure continued to evolve.

The transaction illustrates an important feature of private equity investment.

Value can be created not only through the operation of a business but also through acquisitions, restructuring, changes in ownership, and transactions involving related companies.

These strategies may benefit investors and strengthen commercial operations.

But they can also produce complicated ownership arrangements that are difficult for customers, employees, and the public to understand.

The important question is not whether such transactions are profitable.

It is whether the financial benefits are accompanied by improvements in the products, services, and working conditions upon which the business ultimately depends.

What Does Private Equity Ownership Mean for Employees?

PetSmart employs more than 50,000 people.

They include retail associates, groomers, trainers, managers, and employees involved in animal care and customer service.

Their work is essential to the company's success.

A grooming appointment is not simply a commercial transaction.

It involves handling a living animal that may be frightened, elderly, painful, or medically vulnerable.

Appropriate care requires training, patience, judgment, and sufficient time.

Similar considerations apply to employees responsible for housing and caring for animals offered for sale.

Financial pressures can influence staffing levels, scheduling, training, and productivity expectations.

In any large commercial organization, management must balance operating costs against service quality.

That balance becomes particularly important when employees are responsible for animal welfare.

There is a fundamental difference between increasing the number of products processed through a warehouse and increasing the number of animals handled by a groomer.

Animals are not interchangeable units of production.

Their needs vary.

Some require additional time, specialized handling, or veterinary attention.

A responsible employer must recognize these differences.

PetSmart's 2025 Corporate Social Responsibility Report describes substantial investments in employee training, including approximately 1.2 million hours of training for associates in pet-care roles.

It also reports an average hourly wage of $19.46 for U.S. field associates.

These are relevant indicators of the company's stated commitment to its workforce.

However, training hours and average wages do not, by themselves, establish whether staffing levels are adequate or whether employees feel free to prioritize animal welfare over productivity.

The more meaningful measures would include employee retention, workplace safety, animal-care incidents, and the effectiveness of systems for reporting concerns.

Private equity ownership does not necessarily produce poor employment practices.

But neither should improved profitability be accepted as proof of good employment practices.

The two outcomes must be assessed independently.

Veterinary Medicine Enters the Picture

Perhaps the most consequential aspect of PetSmart's development is its involvement in veterinary services.

The company reports more than 700 veterinary-care locations associated with its stores, including facilities operated through relationships with Banfield Pet Hospital, PetSmart Veterinary Services, and other veterinary operators.

These arrangements should not be confused with PetSmart owning every veterinary practice operating within its stores.

Different ownership and operating structures exist.

Nevertheless, the integration of veterinary services into a large retail environment reflects a broader transformation of the profession.

Veterinary medicine was historically dominated by independently owned practices.

The veterinarian often owned the hospital, employed the staff, made clinical decisions, and accepted responsibility for the financial viability of the business.

Today, many veterinary practices are owned by corporations or investment groups.

The veterinarian may remain responsible for clinical decisions while having limited influence over staffing, pricing, capital expenditure, or business strategy.

This separation of professional and financial authority creates potential tensions.

A veterinarian's ethical obligation is to recommend care appropriate to the animal and its circumstances.

A commercial organization must also consider revenue, profitability, and return on investment.

These interests can align.

Good veterinary care can produce satisfied clients, professional fulfillment, and a financially successful practice.

But conflicts can arise when financial targets influence appointment schedules, diagnostic recommendations, treatment options, or staffing.

Consider a veterinarian who believes that a particular patient requires a longer consultation.

The professional decision may be clinically appropriate.

But if the organization places substantial emphasis on appointment numbers or revenue per veterinarian, there may be pressure to shorten the consultation.

The same concern applies to recommendations for diagnostic testing, preventive products, and treatment plans.

The ethical issue is not whether veterinary practices should be profitable.

They must be financially sustainable.

The issue is whether professional judgment remains genuinely independent.

Veterinary medicine is a profession that operates within a business.

It should not become a business in which professional judgment is subordinate to financial performance.

This principle applies regardless of whether the owner is an individual veterinarian, a corporation, or a private equity investment firm.

Does Private Equity Improve or Undermine Animal Care?

It would be simplistic to argue that private equity investment necessarily harms animal welfare.

Large organizations may have advantages.

They can invest in technology, professional training, information systems, equipment, and standardized safety procedures.

They may provide employees with career opportunities and benefits that smaller businesses struggle to offer.

They can also expand services into communities where access is limited.

These potential benefits deserve recognition.

But scale can also create problems.

Decisions may become increasingly centralized.

Managers may be evaluated primarily according to financial performance.

Employees may have limited opportunities to influence corporate policies.

And the people responsible for setting financial objectives may be far removed from the animals and professionals affected by those decisions.

The relevant question is therefore not whether private equity is good or bad.

It is whether ownership arrangements include effective safeguards for animal welfare, employee well-being, consumer protection, and professional independence.

Such safeguards should be measurable.

A company should be able to demonstrate not only that it has policies, but that those policies produce appropriate outcomes.

The welfare of animals cannot be adequately evaluated through revenue growth, customer numbers, or shareholder returns.

Those are measures of commercial success.

Animal welfare requires different measures.

The Problem of Transparency

PetSmart's private ownership introduces another important consideration.

As a publicly traded company, PetSmart was required to disclose extensive financial information.

Private ownership reduced those obligations.

PetSmart continues to publish information concerning corporate responsibility, employee development, animal care, and sustainability.

Its 2025 Corporate Social Responsibility Report provides considerable detail about these activities.

That transparency is welcome.

However, a corporate responsibility report is not equivalent to a comprehensive set of publicly audited financial statements.

Nor does it necessarily provide independent verification of every claim concerning animal welfare or employment practices.

This distinction matters.

A company may report substantial investments in training without disclosing the relationship between staffing levels and adverse animal-care incidents.

It may describe commitments to employee well-being without publishing detailed information about turnover, grievances, or workplace disputes.

And it may emphasize revenue growth without revealing the full implications of debt obligations or investor distributions.

None of these omissions establishes misconduct.

But they limit the ability of outsiders to evaluate whether commercial success is accompanied by responsible conduct.

Transparency is not simply the publication of favorable information.

Transparency is the willingness to provide information that permits independent assessment, including information that may be uncomfortable.

Who Ultimately Benefits?

The question posed in the title of this article has several possible answers.

Private equity investors may benefit through increased business value and financial returns.

Customers may benefit from greater convenience, improved services, and competitive prices.

Employees may benefit from training, career development, and investment in business operations.

Veterinary professionals may benefit from improved facilities, technology, and administrative support.

And animals may benefit from better products, improved healthcare, and expanded access to services.

These outcomes are not mutually exclusive.

A well-managed business can create value for all these groups.

But the distribution of benefits is not automatic.

Investors have clearly defined financial interests.

Employees, customers, veterinarians, and animals have different interests, some of which are less easily measured.

An animal cannot negotiate the quality of its grooming appointment.

A veterinary patient cannot evaluate the financial incentives influencing a treatment recommendation.

And an employee may have limited influence over corporate policies that affect the time available to provide appropriate care.

These differences create responsibilities that extend beyond conventional financial management.

The more powerful and financially sophisticated an organization becomes, the greater the importance of ensuring that those affected by its decisions are adequately protected.

The Financial Value of Compassion

The PetSmart story illustrates a remarkable development.

The affection people feel for companion animals has become an increasingly important economic force.

That affection supports businesses employing thousands of people, producing valuable products, and providing essential services.

It has also attracted major financial investors.

BC Partners recognized the commercial potential of PetSmart in 2015.

Apollo recognized that potential again in 2023.

Both investments reflected confidence in the continuing growth of the companion-animal industry.

Their investment decisions were based upon reasonable expectations of financial returns.

But the industry's underlying economic strength comes from something that cannot be measured entirely in dollars.

The relationship between people and animals.

That relationship is built upon affection, responsibility, companionship, and trust.

It is also the foundation of veterinary medicine.

For veterinarians, animal welfare is not simply a commercial opportunity.

It is a professional obligation.

For owners, the health of a beloved animal is not merely another consumer purchase.

It is often a deeply emotional responsibility.

And for the animals themselves, the consequences of commercial decisions may be profound.

There is no reason why responsible investment and animal welfare cannot coexist.

Indeed, capital investment can improve the availability and quality of animal care.

But the interests of investors must not become the only interests that matter.

The success of a business serving animals should be measured not simply by the financial returns it generates, but also by the welfare of the animals, the treatment of its employees, the trust of its customers, and the independence of the professionals who provide care.

That is the challenge facing PetSmart and the increasingly corporatized companion-animal industry.

And it leads to another intriguing question.

What happens when a major commercial enterprise establishes a charitable organization dedicated to improving the welfare of the very animals upon which its business depends?

Can commercial success and genuine philanthropy coexist?

Certainly.

But can a charitable organization closely associated with a private-equity-owned business remain genuinely independent?

That question deserves an article of its own.

Coming Next

The Business of Compassion (Part 3 of 6): PetSmart Charities, Philanthropy, Animal Welfare, and Corporate Reputation

Since its establishment in 1994, PetSmart Charities has supported millions of animal adoptions and distributed hundreds of millions of dollars to animal-welfare organizations.

Its achievements are substantial.

But how independent is the charity from the commercial enterprise with which it shares a name?

Who appoints its directors?

What relationships exist between its board, PetSmart executives, and the company's financial investors?

And how should we distinguish genuine charitable achievement from the commercial benefits of corporate philanthropy?

Sources

BC Partners. (2014). Consortium Led by BC Partners to Acquire PetSmart for $83.00 per Share in Cash. https://www.bcpartners.com/news/consortium-led-by-bc-partners-to-acquire-petsmart-for-83-00-per-share-in-cash/

PetSmart, Inc. (2015). Consortium Led by BC Partners Completes Acquisition of PetSmart, Inc. U.S. Securities and Exchange Commission, Exhibit 99.1. https://www.sec.gov/Archives/edgar/data/863157/000119312515087596/d887827dex991.htm?utm

BC Partners. (2023). Apollo Funds to Make Strategic Equity Investment in PetSmart. https://www.bcpartners.com/news/apollo-funds-to-make-strategic-equity-investment-in-petsmart/?utm

Apollo Global Management. (2023). Apollo Funds to Make Strategic Equity Investment in PetSmart. https://ir.apollo.com/news-events/press-releases/detail/458/apollo-funds-to-make-strategic-equity-investment-in-petsmart?utm

PetSmart. (2017). PetSmart Completes Acquisition of Chewy. https://investor.chewy.com/news-and-events/news/news-details/2017/PetSmart-Completes-Acquisition-of-Chewy/default.aspx

Chewy, Inc. (2019). Quarterly Report and Initial Public Offering Information. U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1766502/000176650219000017/chewyq3201910-q.htm?utm

BC Partners. PetSmart–Chewy: Investment Portfolio Overview. https://www.bcpartners.com/portfolio/petsmart-chewy/?utm

PetSmart. (2025). Corporate Social Responsibility Report: A World Through Their Eyes. https://petsmartcorporate.com/corporate-social-responsibility/2025-csr-report?utm

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