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Sources of capital for consolidators in the veterinary sector

Apart from the veterinary clinics owned by Mars, most consolidators in the veterinary sector acquire capital from private equity firms. The firms manage money from different investors, such as state pension funds, insurance companies, endowments, and money from wealthy people. They are tasked to buy the veterinary clinics, support their growth and resell them after a few years. Private equity firms in this sector expect to reap profits or rather get a return on the investments through a range of events. The hospitals they run bring in profits, enabling them to buy more clinics hence huge overall profits Ultimately, private firms sell a group of hospitals at a higher price than they were bought. Most of these firms don’t operate the hospitals for long. They aim to beat the average quarterly and long-run stock market return, which is around 7% per year. Overall, the consolidated veterinary hospitals are surpassing the target returns of 20%. Even during poor economic conditions, veterinary clinics still do good business. Michael (2019 p.1) noted that during the last recession, the veterinary industry was down by 1%, which was great compared to other industries that went down by 10-50%.

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