Welcome to The Business Buying Academy with Sieva Kozinsky.

🔑 How to Franchise the Right Way

If you're reading this newsletter, you either own a business (maybe several), or you want to own one.

And you've probably considered franchising at some point.

Franchising can be wonderful. It can also be a disaster.

Connor Groce has seen both outcomes up close, and lived to tell about it.

If you’d like his help identifying, evaluating, and funding the right franchise for you, schedule a free intro call with him.

Connor has owned and operated franchise units in multiple systems. He has grown his own portfolio through successful acquisitions and is one of the leading voices at the intersection of ETA and Franchising.

He also publishes a weekly newsletter called "Franchise Gateway" and serves as the franchising contributor for Acquiring Minds (one of my favorite podcasts)

If there's anyone you're going to learn the franchise business from, it needs to be Connor.

Thanks to Connor for sponsoring today's newsletter.

🔑 Private Equity's Playbook for Buying Vet Clinics

In the early 2000s, while most investors focused on tech startups, private equity spotted a rollup opportunity in an unlikely corner of the healthcare market:

Veterinary clinics.

The industry was highly fragmented, recession-resistant, and traded for low multiples.

An ideal setup for private equity.

The deals we'll dive into today laid the foundation for a candy company owning more vet clinics that anyone.

The Fragmented Veterinary Landscape: A PE Dream Market

In the late 1990s and early 2000s, the U.S. veterinary industry looked nothing like today.

Estimates placed the total number of practices between 28,000 and 32,000, the vast majority of them small, independent clinics owned by individual veterinarians.

Most were general-practice mom-and-pop operations serving companion animals, with limited scale in diagnostics, specialty care, or supply-chain efficiencies.

Pet ownership was surging: more households were treating dogs and cats like family members.

Spending on pet health grew steadily, creating predictable cash flows that appealed to PE investors seeking defensive, non-cyclical assets.

Yet the industry suffered fragmentation pain points, including:

• Aging practice owners
• High student debt for new vets
• Razor-thin margins from inefficient operations.

PE firms recognized the playbook that had worked in other healthcare verticals and brought it to vet clinics:

Buy a strong “platform” practice, then execute add-on acquisitions to achieve economies of scale in purchasing, centralized administration, lab diagnostics, and referral networks.

The result:

Higher EBITDA margins and a more attractive exit multiple down the road.

How Much Private Equity Is Paying for Veterinary Practices in 2025​​​"General practices and smaller clinics command around 5 to 7x EBITDA, with strong mid-sized practices going up to 12x. Niche, specialist, or exotic practices can get anywhere between 3 to 13x EBITDA. There is always that booming location that can fetch 15x or more."
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- Transitions Elite Blog​

PE’s Entry: The Early 2000s Roll-Up Wave Begins

Healthcare-focused PE first dipped its toes into veterinary services in the early 2000s, following earlier corporate experiments like VCA Animal Hospitals (founded 1986, which began aggressive acquisitions in the late ’80s).

PE momentum picked up 2000 to 2007. Key catalysts included:

• VCA’s PE-backed pivot: In 2000, Leonard Green & Partners (a PE firm) took VCA private in a leveraged buyout, accelerating its roll-up strategy. By 2005, VCA had merged with Pets’ Choice (another early consolidator), creating one of the largest networks at the time. VCA’s integrated model (pairing general practices with its own Antech Diagnostics labs) became a blueprint for others.

• Vet-founded platforms get PE backing: National Veterinary Associates (NVA) was launched in 1996 by a veterinarian with a vision for scaling. Summit Partners invested in NVA, injecting capital to fuel acquisitions across general and specialty hospitals. Similarly, VetCor (also founded in 1997) began its national footprint in the 2000s, later attracting PE recaps.
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• Specialty and ancillary plays: BrightHeart Veterinary Centers emerged around 2007 as an early PE-backed specialty/emergency roll-up. Mars, Inc. (the candy giant pivoting hard into pet care) fully acquired Banfield Pet Hospital in 2007.

Candy maker Mars is the biggest vet provider in the country
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​The candy conglomerate’s first investment in vet clinics came in 1994, when Mars acquired a stake in Banfield Pet Hospital. In 2007, it bought the rest of Banfield...But its biggest impact on the vet industry came in 2017 when Mars paid $9.1 billion to take VCA private, a deal that added 800 animal hospitals and clinics to its roster. The VCA acquisition remains the second-biggest sale in the pet clinic space.​- Yahoo Finance, January 2025

PE quietly assembled holding companies that consolidated both general practices (for volume) and specialty/referral hospitals (for high-margin services like surgery, oncology, and diagnostics).

The strategy emphasized retaining local branding and vet autonomy to ease the ownership transition (tactics still used today across vet clinics, dental offices, and other medical businesses).

The Roll-Up Playbook

Early PE operators focused on three value-creation levers:

1. Scale in diagnostics and services: Owning labs and specialty referrals internally captured more of the revenue stack.
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2. Operational efficiencies: Centralized purchasing slashed supply costs; shared admin, HR, and marketing freed up vets to focus on medicine.
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3. Add-on strategy: Start with a strong platform, then bolt on smaller independents at 4–8x EBITDA multiples, far below what platforms could command on exit.

By the late 2000s, these platforms proved the model worked.

Veterinarians selling into roll-ups often received premium valuations (sometimes 2–10x their prior earnings), when previously there had been little demand for these businesses (any potential buyer had to be a veterinarian before PE got involved).

At the end of the 90s, about 8% of vet clinics were corporate/PE owned.

Today, it's around 25% and increasing.

We've seen this same playbook executed across other medical businesses: Dental, physical therapy, rehab centers, home health, and many others.

We'll continue to see it played out over the next several decades across new industries as well.

Thanks for reading.

Sieva

P.S. - Are you hiring? Get started with top global talent from Somewhere (I'm a customer and investor)

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.