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Pets Still Hot in 2011



I continue to feel amazed and blessed to be part of this incredible conglomeration of people and businesses known as "The Pet Industry.” It started in 1987 when I was still working as a CPA, and I made the somewhat controversial decision to open a pet store. Twenty-four years later, here I am. Was it a good career move? Are you wondering if you are in the right industry?

Yesterday I attended a sold-out ACG (Association for Corporate Growth) luncheon featuring one of America’s top economists, Dr. Alan Beaulieau. Every year he (or his brother Brian) comes to Denver to give us his take on what’s next for the local and national economy. Overall, his prediction is a continued recovery throughout 2011 and 2012, and a suggestion to raise prices throughout the next two years. He also noted that a weakening dollar means we should increase our investments in foreign stocks--particularly if we don’t get the U.S.’s spiraling deficit under control.

But what really perked my ears up is when I asked him what the hottest industry sectors for 2011 and 2012 were and he answered:

#1: Commodities. Prices skyrocketed in 2010 and will continue to do so in 2011 and 2012.
#2: Medical for the Elderly. Starting this year, Baby Boomers will turn 65 at the rate of 10,000 a day. You can only imagine the opportunity that will bring for doctors, hospitals, and nursing homes for the next 20 years.
#3: PETS. Yep, of all the segments he could have mentioned, he said the pet segment was going to continue to grow. He specifically mentioned the growth of services such as pet care and veterinary. The people at my table all smiled and gave me the thumbs up. It was great to have my suspicions confirmed and to validate my choice of where I make my living.
#4: Funeral Homes. What a contrast to pets.

As an investment banker and consultant, I make it a point to read anything and everything I can get my hands on related to the pet industry and, in particular, with respect to mergers and acquisitions.

One of the hottest sources of information in this area is called PitchBook. PitchBook has a daily e-newsletter reporting on the latest private equity M&A transactions. Last week its feature article was titled "Private Equity Reconnects with Pets.”

The article stated:

"As pet owners spend more and more money each year pampering and taking care of their pets, Private Equity investors are continuing to invest in businesses in the Pet industry. Since the beginning of 2007, 46 PE investors have completed equity investments in 44 pet-related companies, according to the PitchBook Platform. Deal activity in the Pet industry slowed down a couple years ago, dropping from 12 deals in 2008 to only 7 during all of 2009. However, activity rebounded last year with 11 completed deals. Of the 46 PE investors who invested in the Pet industry, the most active include LLR Partners (4 deals), Unified Growth Partners (4) and Caltius Equity (3).”

Having morphed from a retailer to distributor to manufacturer and now investment banker/consultant to the pet industry, I have certainly seen our share of ups and downs. But I’m still here--and so are you. So congratulations on picking an industry that has such resilience and staying power--and here’s to a fantastic 2011.



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