SUCCESS STORY:Community Veterinary Partners
Investment Year: October 2015
Industry: Healthcare Services
Ownership Profile: Founder-Owned
Exit Year: October 2019
Situation Overview
Community Veterinary Partners (“CVP”) is a leading network of veterinary hospitals headquartered in Philadelphia, PA. At the time of our investment, CVP owned and operated 16 general practice hospitals located in the Mid-Atlantic. Then-CEO and founder, Dan Eisenstadt, had been a long-time investor in Cortec’s funds. While he had successfully scaled CVP from the ground-up since founding the company in 2009, he knew that CVP required more than just capital to support its next stage of growth. Following a competitive process, Dan chose to work with Cortec based on his familiarity with, and confidence in, Cortec’s time-tested approach.
Investment Thesis
CVP was a well-run business with many attractive attributes, including strong profitability, numerous expansion opportunities, and a cash-pay business model. We felt confident we could grow the company in partnership with Dan and his team.
The veterinary services sector was characterized by steady demand and recession resistance. The industry was also highly fragmented, facilitating the company’s ability to expand by acquiring local hospitals at attractive purchase price multiples and driving post-closing improvements in technology, veterinarian recruitment and retention, strategic pricing, and vendor management. We saw a path to significantly expanding the business using these tactics, in addition to building out the leadership team and centralizing / optimizing the company’s corporate infrastructure.
Evolution From Entry to Exit
Key Cortec Value-Add Initiatives
Enhanced the Leadership Team
- Significantly expanded CVP’s management team, adding 15 positions across all functional departments, including: finance, marketing, operations, business development, and human resources
- Established Medical Advisory Board consisting of key veterinarian leaders focused on clinical operations and quality assurance
Executed an Aggressive Acquisition Strategy
- Expanded footprint from 16 to 70 hospitals over four years via acquisitions
- Internalized the business development function by hiring a full team (VP, four directors, and one analyst) to drive M&A sourcing and execution
- Developed a dedicated, cross-functional integration team and efficient, repeatable post-closing processes
Enhanced Corporate Capabilities
- Relocated corporate support center to a new 10,000 square foot site
- Centralized the company’s Human Resources function to manage recruiting, retention, payroll, and benefits
- Established a regional operations framework / infrastructure to manage CVP’s expanded hospital footprint
Optimized Systems and Infrastructure
- Implemented new systems and tools to better track KPIs and manage the business more efficiently
- Upgraded software across several key functions: practice management, accounting, and merchant services, among others
Footprint Expansion
Outcome
Four years after our initial investment, Cortec exited CVP in October 2019 via a highly competitive sale process to a larger investment firm to continue executing on the playbook that we established.
Past performance is not necessarily indicative of future returns. Case studies are for illustrative purposes only and do not represent a complete list of investments. There can be no assurance future investments will be comparable in quality or performance.
Window Nation