Sustainable success: Medivet doubles with Inflexion
Medivet reached incredible scale in just four years working in partnership with Inflexion, doubling headcount and the number of sites in the UK whilst expanding into Europe.
Medivet is a truly great business. It was founded in 1986 to help pet owners look after their beloved four-legged friends and had built up a chain of 150 clinics around the South of the UK when private equity suitors began taking real interest in the 2010s. But shareholders weren’t interested as management were growing the business beautifully.
Around that time, some of the management team met Inflexion serendipitously at a trade show hosted by Closer Still Media, then an Inflexion portfolio company, and Medivet was a finalist for Entrepreneur of the Year at the National Business Awards, which Inflexion sponsor. A relationship developed, with both sides getting an understanding of what the other did and could offer.
“We didn’t need a backer,” says co-founder Arnold Levy of the time. “We took Inflexion on because we wanted to de-risk and they offered true minority capital – which is rare. We wanted their expertise to complement us, and they helped us to get us to where we are now as a partner who really contributed to the business.” He is careful to point out they weren’t considered investors who owned the business: “They were minority partners who didn’t just sit on the wings and talk about things, they got heavily involved when we needed it.”
Indeed Medivet grew from around 150 sites mostly in the south of the UK when they partnered with Inflexion in December 2016 and were c300 in the UK and 40 in Spain and 20 in Germany when the business was sold to CVC Capital Partners in September 2021. Such scale required changes within the business.
Medivet’s management was keen to draw on Inflexion not just for its flexible funding, but also its experience in scaling, and so invited them to help build out the leadership team. Deirdre Burns was brought in as Chair through a process led by Inflexion. “Medivet’s is like no other sector in that if you empower the clinicians to serve their end users to the best of their ability – the pets and their owners – the commercial side takes care of itself,” says Deirdre, who had met Inflexion through another portfolio company. “Inflexion genuinely understood that they were minority backers. My job as chair was to bring in their expertise when I felt it was needed, and the shareholders accepted that. They genuinely brought real expertise and a really strong will to support the plan once it was decided.”
Her retail background complemented existing management’s veterinary expertise and was well suited to the direction the business was going. Further senior appointments supported by Inflexion included a CFO, CTO and CMO as well as an HR function, which proved critical to the business’s growth. Inflexion also drew on its digital expertise to help the business’s evolution. “Medivet focused on the highly engaged pet owner and delivered them better service served up by digital means, such as tailored, automated reminders. It gets the best results for them and bonds them to your brand,” explains Mark Williams, Inflexion partner who sourced the opportunity.
The longstanding management worked alongside the new c-suite appointments. “By the time we got to the point of sale, the bus was being led by Deirdre, and we were there supporting but no longer operating the business. I moved from the front to the back, including playing a big role in the acquisitions in the final year,” recalls Arnold.
The changes drove value throughout the journey, not just at the time of the eventual sale. “All the work we did from 2017-2019 gelled just before the pandemic. We were able to pivot our business in just two weeks and so we were able to offer virtual consultations and stay open – very important because some pet owners were turned away by others. It was a bit like a war room and we hosted daily ‘cobra’ meetings during the tough times. It was scary but it turned out to be good for us and our pet owners in the end,” says Arnold.
“Some ownership models aren’t clear, but Medivet’s is and encourages the vets to grow. All the deals we’ve done were partnership-led approaches. Sharing the rewards led to better results,” Mark says. Deirdre concurs: “What makes it unique is the total partnership, with all partners having a stake in the business. As they grow, Medivet grows and so everyone is truly aligned.”
The UK rollout saw numbers more than double to over 300, and the last year of partnership saw an international push. With the UK market already c70% consolidated, France, Germany and Spain were still very fragmented. “The point of acquiring internationally is to build a bigger footprint but also build proof of concept as we reinforce this business as truly different to competitors,” Mark says.
While the model was clear, it was also hub and spoke, meaning all were standalone yet connected. “Everyone can buy and build, but do you integrate it into your model, or do you leave it as it is? If the latter, you can lose momentum with the acquired businesses. Medivet integrates and the referrals are great for the sites and the hospitals,” Deirdre says.
The Medivet and Inflexion journey showed what can be achieved with true partnership.
Real change with minority investment
Inflexion’s Partnership Capital Fund was the UK’s first private equity fund exclusively dedicated to minority investing, enabling businesses to access expertise and flexible funding from an experienced investor, whilst allowing the founders to retain a controlling stake. To date, Inflexion has made 17 Partnership Capital investments and five successful exits generating with a combined value of over £3 billion.
The 2016 investment marked Medivet’s first opportunity to take money off the table. “It helped the team feel they could embrace the growth plans as they were de-risked; it separated the founders’ risk: reward profile from the business’s,” explains David Whileman, Partner and head of Inflexion’s Partnership Capital offering. He adds, “The partnership was a real turning point for us too, because we showed you can achieve a lot by building trust and going on a journey with people to really drive change.”
To have done so as a minority backer made the journey different to control transactions. “We didn’t have the right to change the business, but we were invited to because of the trust we’d built prior to the deal,” David recalls.