Axial Forum Article Explores Pet Industry M&A and Investment Outlook

SDR’s Jodi Burrows Provides Insights and Data on Pet Industry M&A and Private Equity Interest

In a recent article on the Axial Forum, author Nora Zhou interviewed SDR Ventures’ VP Jodi Burrows to gain her perspective on strong pet industry growth and to find out what that growth may mean for pet business owners, M&A activity and private equity investments going forward.

Pet IndustryRecent high-profile pet deals (i.e., PetSmart’s acquisition of online pet food retailer Chewy.com and Mars’ acquisition of veterinary hospital operator VCA Inc.) have brought increased attention to the pet industry, and valuation multiples have been strong over the past several years. While the industry is attractive to PE investors, it has also become a more complex environment to operate in, with the shift to online affecting some business strategies and consolidation changing the competitive landscape.

To find out where a particular pet company fits into this evolving landscape, pet business owners should stay up-to-date on current developments and may want to consider receiving a market-based valuation from a reputable M&A advisor.

A preview of the article is available below. 

Article preview

The Pet Industry Remains an Active Space for Middle Market Investments and Growth

Activity within the pet industry has become increasingly interesting to investors as well as entrepreneurs because of the sheer size and growth of the market and the passion that people have for their pets, said Jodi Burrows, a vice president at SDR Ventures. The American Pet Products Association (APPA) estimated that total consumer spending on pets will be $62.7bn in 2017 and is projected to reach $69.4bn in 2018. Private equity firms are eyeing the investment opportunity. However, certain disclosed transactions that have garnered outsized valuations and middle market multiples overall are driving higher valuation expectations among some industry players, regardless of scale, growth or profitability.

“Much of the industry growth revolves around the concept of the humanization of pets, where people are treating their pets more as kids, and part of the family,” said Burrows. “It used to be that you would keep the dog house out in the yard. But now, your dog is sleeping in your bed with you.”

As pets become a bigger part of the family, people today are spending more money on them. The ongoing humanization of pets is driving not only the growth of premium, expensive pet food and treats and the broader health and wellness category, but all ancillary products and services that pamper and indulge pets. Better food, more toys and clothes and more advanced veterinary services all contribute to the growth of the pet products industry.

According to SDR Ventures’ Q3 Industry Report, pet industry trends have increasingly followed closely behind trends in human products. When a new food or health trend enters the human market, such as grain-free or fitness trackers, versions are emerging in the pet space at faster and faster rates. And the firm is seeing this play out in the growth of private label pet products, especially food. Consumers are demanding premium products for themselves and their pets but are looking for a trusted way to find them at lower costs…

To read the full article on Axial, please follow this link.

To read SDR’s latest Pet Industry M&A Report, click here.

Axial Forum - Pet Industry