Private Equity in Veterinary Care: A Visual Guide to Controversial Practices
Private equity is among the most divisive concepts in modern business. Proponents argue it injects capital, expertise, and efficiency into companies. Detractors see it as a pathway to profiteering, cost reduction, and staff attrition. The debate intensifies when private equity enters essential services like healthcare, particularly the NHS. However, one in eight British workers is now employed by a private equity-backed firm, according to industry data.
To illustrate how private equity operates and why it stirs such strong reactions, The Guardian constructed a fictional veterinary practice. This model explores three contentious elements: debt financing, cost-cutting, and short-term ownership. It is an illustrative example, not a definitive account of a vast and complex industry.
The Use of Debt in Leveraged Buyouts
Imagine your local vet practice is purchased by a private equity firm for £10 million. The original owner exits. In a typical leveraged buyout, only a small fraction of the purchase price comes from the private equity firm itself—usually 2–5% of the total investment, according to the Institutional Limited Partners Association (ILPA). In this case, the firm contributes £250,000 (2.5%). Investors, such as high-net-worth individuals or pension funds, provide 45–50% of the cash (£4.75 million). The remaining 50% (£5 million) is borrowed, often from a bank.
Critically, the debt is not repaid by the private equity firm but by the vet practice’s future cash flow. This means the business partially pays for its own acquisition. The loan must be serviced alongside operating costs, potentially straining finances from day one.
Michael Moore, chief executive of UK Private Capital, the industry trade body, defends the practice: “Responsible use of leverage is about optimising a company’s capital structure to support growth, not placing it under undue strain. Lenders undertake rigorous due diligence and will not support transactions they consider over-leveraged. Crucially, private equity firms succeed by building stronger, more valuable businesses over time, so it is firmly in their interests to ensure debt levels are sustainable.” He also notes that leveraged buyouts are just one of several financing structures used by private equity.
Cost-Cutting and Its Consequences
After acquisition, the branding often remains unchanged—a point the Competition and Markets Authority (CMA) has asked firms to address. However, internal operations may shift. Dr. David Reader, a senior lecturer in law at the University of Glasgow researching private equity in the vet sector, says: “The underlying, very clear incentive of private equity is profit maximisation in a short space of time.”
Cost-cutting frequently targets wages, the largest expense. Suzanna Hudson-Cooke of the British Veterinary Union (BVU) reports: “Over the last couple of years we’ve seen a lot of people being made redundant. Private equity and large corporations generally have tended to reduce non-clinical staff from receptionists to vet care assistants. Clinical staff end up doing these roles—veterinary nurses, for example, doing reception. It has a huge impact on the whole clinic.”
Other savings come from cheaper supplies or eliminating less profitable services like 24-hour care. Conversely, prices can rise. Vet bills in Britain increased 60% between 2015 and 2023. The Guardian found a cat owner quoted £900 for dental plaque removal. A CMA investigation revealed that three private equity-owned vet groups charged on average 18% more than independents.
Customers could switch vets, but this becomes difficult when private equity firms engage in “roll-ups”—acquiring multiple practices in a region. According to 2024 CMA figures, 44% of small animal practices are now private equity-owned. Dr. Scott Summers, associate professor in law at the University of East Anglia and co-author of a private equity study with Reader, warns: “If this happens across the market, pet ownership is going to become something only someone who's incredibly wealthy can afford.”
Moore counters: “Private equity firms professionalise businesses, helping them adapt to the challenges of the energy transition and tech disruption, with both the capital and expertise that makes them competitive. Roll-ups bring real strategic benefits by helping businesses that couldn’t deliver those capabilities on their own. They don’t take competition out of the market, but change its shape with firms still competing alongside new entrants and under the watch of regulators to make sure standards and choice are protected.”
The CMA has recommended transparency of ownership and clearer pricing. There is also a legislative push for a new independent regulator for veterinary clinics, as currently only individual medical staff are regulated, not the businesses.
Short-Term Ownership and Exit Strategies
Private equity firms typically hold investments for four to seven years, according to UK Private Capital. When they decide to sell, the business may be left in a precarious state. Summers fears: “They'll actually kill the market because people will stop going. That's typically when private equity will identify that tipping point, and strategise their exit.”
Investors expect returns, so the firm sells the practice to a new owner. If the sale succeeds, investors are repaid with a profit. However, if the purchase was debt-financed, the debt remains with the vet practice. In a best-case scenario, the business has grown and become more efficient. In a worst-case scenario, it is saddled with debt and charges high prices for lower-quality services. Summers worries that rising vet prices could lead to “a point where having a pet is just for the elite.”
Moore responds: “Private equity investment is inherently long term. Private equity firms hold investments for over six years on average. Private equity fundamentally needs to create growing companies or businesses with strong growth potential as the more attractive the business, the higher returns it can deliver to investors.”
Reader acknowledges benefits: “There are benefits to be had from investment from private equity, in fragmented markets [it helps] realise efficiencies,” such as new medical technology, flexibility, work-life balance, and higher pay for some. But both Reader and Summers stress that these benefits must be weighed against risks, especially in care-centric sectors. Summers concludes: “The problem with private equity is it sits at odds with animal welfare, which is the core of this market. So there is a question here, I think, a societal question. Should private equity be involved in those markets? Does it add enough value given it comes with all those risks?”
