Pets a Good Bet

According to a new study by Katten, pet owners’ love for their animals, along with the impact of COVID-19, are among the reasons decision-makers feel bullish about the future of private equity and animal care.

Katten’s new study – 2020 Private Equity in Animal Care Survey – polled more than 100 animal care operators and private equity professionals who have participated in a private equity animal care transaction over the past two years or expect to soon. The survey reveals that what made animal care tempting for private equity before COVID-19 — low risk, good returns, and relatively light regulation — began to resonate even more amid stay-at-home orders and perhaps a reevaluation of household priorities.

“Pet ownership jumped in recent months as more people have been stuck at home,” said Kimberly Smith, a partner and co-chair of Katten’s global mergers and acquisitions/private equity practice. “Simultaneously, the tried-and-true factors that have historically attracted private equity to animal care remain intact, and there’s plenty of unallocated capital still on the sidelines. While we found the bullishness on animal care investments somewhat surprising in light of the uncertainty swirling around the deal market right now, the survey shows that the fundamentals still make sense.”

Other survey findings include:

  • Despite its broad economic damage, the pandemic at least somewhat positively impacted 68 percent of private equity respondents’ outlook when it comes to animal care, while 61 percent of animal care respondents have become more open to private equity since COVID-19 swept through the United States in March 2020.
  • Additionally, 90 percent of private equity respondents agreed that animal care is an attractive target, and 71 percent expect private equity transactions in the sector to increase over the next year — with more than one quarter saying the increase would exceed 10 percent.
  • For all survey respondents, therapeutics and diagnostics were the greatest investment opportunity over the next two years. Technological advances in animal care are expected to accelerate as a result of COVID-19 — which is likely why survey respondents point to technology products for pet owners as an area ripe for investment.

Katten’s 2020 Private Equity in Animal Care Survey was conducted online in May 2020. For more information and to download a PDF of the 18-page survey results, please click on the image on the right.

Katten’s mergers and acquisitions/private equity practice has decades of experience in a range of transactions, including leveraged buyouts and other acquisitions, dispositions, equity and debt financings, restructurings, and recapitalizations. Each year, the firm’s deal teams advise private equity firms, strategic acquirers, family offices, and independent sponsors on transactions with billions of dollars in value.

Chicago-headquartered Katten has nearly 700 attorneys with locations across the United States and in London and Shanghai. The firm’s core areas of practice include commercial finance, corporate, financial markets and funds, insolvency and restructuring, intellectual property, litigation, real estate, structured finance and securitization, transactional tax planning, and trusts and estates.

Private Equity Professional | July 29, 2020

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