Willis Stein Cashes Out Of 1997 Deal

Target: National Veterinary Associates

Purchase Price: $220 million

Seller: Willis Stein & Partners

Buyer: Summit Partners

Financial Advisor: Seller: William Blair & Co.

Legal Counsel: Seller: Kirkland & Ellis LLP

Baby boomers buying pets for companionship, career-oriented young couples testing their parenting skills on a pet dog—these are just two of the demographic factors fueling the growth of National Veterinary Associates (NVA), a veterinary clinic operator that is cashing in on a boom in pet ownership.

Willis Stein & Partners, the Chicago buyout shop, has owned the company over the last decade, and with its recent sale, generated a 5x return on its original $25 million investment. Boston-based Summit Partners bought the Westlake Village, Calif.-based company earlier this month in a deal that sources value at $220 million, with Summit Partners putting $128 million in equity in the deal.

The veterinary medicine market has grown at an almost 7 percent compounded growth rate for 30 years, according to Willis Stein Managing Partner Daniel Blumenthal.
“Increasingly, people view their pets as members of the family and, not surprisingly, they’re willing to spend very significant amounts of their disposable income on their pets—whether it’s for health care, food, or even toys,” Blumenthal said.

For Willis Stein, the sale of NVA marks the end of a nearly 10-year buy-and-build operation. When the firm first invested in NVA in June 1997, “it was really just a management team and a group of about 22 hospitals” that had been targeted for acquisition, Blumenthal said. Willis Stein funded that initial investment, and then spent most of the next decade growing those hospitals and adding others to the platform.

Giving Willis Stein a lift during its consolidation play was the fact that retiring veterinarians who run individual practices have had a difficult time finding an exit, Blumenthal said. NVA today owns 96 animal hospitals located across 29 states and employing some 1,800 people, including 300 veterinarians. Revenue for the year ending June 30, 2007 is expected to exceed $140 million, sources told Buyouts.

Under Summit Partners’s ownership, NVA plans to accelerate growth by completing more add-on acquisitions, company founder and CEO Stan Creighton said in a prepared statement.

NVA was a portfolio company in Willis Stein’s first fund, which closed in 1996 with $343 million. After the veterinary clinic’s sale, Willis Stein & Partners LP’s single remaining holding is a minority stake in disease management services provider ParadigmHealth. The fund has generated a return multiple of about 2.5x invested capital, sources said.

The firm is making new investments out of Willis Stein & Partners III LP, which it closed with $1.8 billion in 2000.—A.N.