PETS International | Pet Sector Continues to Bring in Investors

Feb 2025

Published by PETS International on February 11, 2025

The pet consumables and pet services sectors have continued to be attractive markets, persisting as one of the most investable segments within the consumer sector as a whole. As evidence of this, the industry carried on seeing strong mergers and acquisitions (M&A) activity across Europe in 2024.

Strength of M&A Activity

Over the past three years, the European pet consumables industry has consistently recorded high M&A activity with an annual deal volume of 70-80 transactions, according to Pitchbook. With approximately 70 deals in 2024, there was a 10% decline in activity compared to 2022. Nevertheless, this decrease is modest relative to the broader consumer sector, where deal volumes dropped by 15% over the same period.

The industry has faced some challenges, including failed transactions and prolonged auction processes, often resulting in sellers reinvesting alongside new investors. However, investor interest in the sector remained robust last year, comparable to pre-COVID and pre-Ukraine war levels.

Veterinary Space

After a modest volume of deals in 2023, activity in the veterinary clinic space continued to recover in 2024. One standout positive was private equity firm Ardian’s investment in Mon Véto, the leading French chain of veterinary clinics. Also in 2024, successful deals for Italy’s Gruppo Animalia, Village Vets Ireland, Tierarzt Plus Partner in Germany, and LuxVet—a partnership-based, flexible business model for Poland’s veterinary industry—demonstrated a clear recovery of poise and appetite.

Unavets, a chain of over 151 vet practices in Spain and Portugal, only narrowly missed out on a deal. Meanwhile, veterinary services group VetPartners UK remains up for sale by private equity firm BC Partners for a purported £3 billion (€3.6B/$3.76B).

Animal Health Products and Services

More broadly, global investment bank Lincoln International saw a diversification of interest across the animal health products and services sector as investors looked to capitalize on the humanization and pet ownership trends. For example, Levine Leichtman invested in Improve International, a veterinary education and training business headquartered in the UK with offices in several European countries, as well as the US.

Private equity firm Bridgepoint invested in Identichip, the UK’s national microchipped pet database, while Exponent supported the future growth of Chanelle Pharma, Ireland’s largest manufacturer of veterinary and medical generic pharmaceuticals.

On the strategic side, Luxembourg-based JAB Holding Company has been sweeping up the global market for pet insurance assets. Clearly, it is seeking to take advantage of the growing demand for pet insurance against the backdrop of escalating costs for veterinary care.

Pet Food and Hard Goods

When it comes to the split between pet food and hard goods such as beds, toys, and accessories, pet food dominated deal volumes from 2022 to 2024, representing approximately 70% of transactions. This reflects pet food’s status as a necessary daily consumable, underpinned by consumer loyalty to premium and specialized nutrition brands.

However, diversification into hard goods is gaining traction in the European pet consumables M&A landscape. Companies are increasingly pursuing combined offerings to capitalize on evolving consumer preferences and trends such as sustainability and product innovation.

Analysis of Buyers and Investors

Buyers and investors in the European pet consumables market are adapting their strategies to align with the evolving economic climate and sector dynamics. Venture capital (VC) activity accounted for approximately 25% of deals in 2024, down from 45% in 2022. This significant decline reflects a reduced appetite for early-stage investments amid tightening economic conditions and a cautious funding environment.

Consolidation is being driven by larger, established strategic players. In 2024, strategic buyers represented 45% of deal volumes, up from 25% in 2023. This sharp increase highlights the priority buyers are placing on market share growth and synergies.

After a dip, private equity (PE) interest has rebounded. It accounted for 30% of deals in 2024, up from 20% in 2023. This resurgence indicates renewed confidence in the sector’s resilience and profitability, with many PE firms targeting scalable and innovative assets.

Fertile Ground for Investment in 2025

Lincoln International is aware of two €1 billion ($1.04B) enterprise-value veterinary clinic deals slated for the second half of this year, but expects to see increased M&A volume before then. The European pet consumables industry continues to offer fertile ground for M&A activity, driven by consumer trends, market fragmentation, and a focus on innovation and sustainability.

Despite reduced VC activity, the return of private equity, combined with increased strategic acquisitions, signals a sector poised for continued growth and transformation. Opportunities abound for investors to capitalize on this dynamic landscape, but competition for high-quality targets remains intense. As consolidation reshapes the industry, the emphasis on quality, sustainability, and digital transformation is likely to define the next wave of transactions.

Recovering Volume in Vet Care

However, potential investors will be keeping a close eye on industry dynamics such as the reduced volume of visits being experienced by vet clinics. This is largely driven by the cost of living and inflationary pressures impacting wallets, as well as the demographics of the ‘pandemic puppies and kittens.’ These have now moved into young adulthood and therefore currently require fewer vet visits and less medical care.

As a European market proxy, US data from the American Veterinary Medical Association (AVMA) and Vetsource highlights a 2.4% like-for-like (LFL) decline in practice visits in the last 12 months. Encouragingly, in their recent results, CVS Group and IDEXX point to lower visit volumes as a short-term negative. Lincoln International agrees with this conclusion. After all, as this COVID cohort enters a more mature stage of life, these pets will require more care once again, leading to a V-shaped recovery in the veterinary sector.

The question is, how will investors factor the recovering volume dynamic into their deals in 2025? Based on 2024 deal activity, investors are likely to take a longer-term positive view for the best-in-class assets.

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