Navigating the Companion Animal Sector: Pet & Animal Health Investment
Pet ownership has been steadily rising in recent years as people around the world brought companion animals into their homes. Against the backdrop of the COVID-19 pandemic, even more consumers became pet parents. According to Shelter Animals Count, rescue organizations in the U.S. recorded a 15% rise in animal adoptions in 2020.
These trends and more have captured investor attention in a sector long proven to be recession resilient.
The Humanization of Pets
Pets are increasingly viewed as members of the family. In turn, owners are pursuing higher quality, specialty goods and veterinary care to ensure the best for their animals.
Health & Wellness Focus
Owners have developed a keen interest in their pets’ wellbeing, from the ingredients in their food to the specialist animal health providers they visit. With more time at home with pets during the pandemic, this trend accelerated.
More than 95% of owners consider their pets to be part of the family—and treat them as such. When purchasing products for their pets, consumers require goods that meet the standard for a beloved member of the family.
Longer Pet Lifespans
With a focus on animal health and wellness, dogs are living twice as long as they did 30 years ago, largely due to the high-quality foods and veterinary care they are receiving. As pet lifespans extend, the need for quality vet care has only grown more critical.
The Growing Middle Class
The growing middle class globally has brought more pet owners and higher pet spending to new markets, notably China and Brazil. This opens the door for global investors to explore cross-border deals.
Digital tools are empowering pet owners to gather data on their pet’s activities and closely monitor their wellbeing.
These systemic trends have heightened private equity and strategic buyer interest in pet and vet businesses. The sector tailwinds have driven valuations up, and increased competition for pet assets among investors as they look to diversify their portfolios and enter new markets. For many, a buy-and-build strategy brings advantages of geographical diversification, an ideal channel mix or economies of scale within specific subsectors.
Companion Animals by the NumbersDeal Volume and Valuations for Pet Businesses
M&A activity in the pet space has steadily grown over the last decade, with deal volume reaching a peak in 2020. Valuations for pet businesses were higher in 2020 than any of the previous five years.
[Source: Pitchbook Data]
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