AWARD SPOTLIGHT: Imperial Capital Winner of the 2021 PE Regional Impact Award for VetStrategy

May 31, 2021 | By: CVCA

It was through a friend on his men’s hockey team that Imperial Capital’s Justin MacCormack first heard about VetStrategy, a chain of animal care clinics founded in 2006.

MacCormack mentioned his firm was interested in the animal care industry and was told about the growing Vaughan, Ont.-based vet chain founded by Orin Litman, Jon Shell, and Litman’s wife, veterinarian Michelle Cutler.

It turned out that MacCormack knew Shell from their days working together at McKinsey & Co., so he called his former colleague to learn more.

For the first year, MacCormack acted as a friendly advisor, helping VetStrategy with its growth plans. But in 2013, when Shell decided to move to Australia and was seeking an investment partner to buy the bulk of his shares, MacCormack shifted roles.

“I said, ‘now I need to put my Imperial Capital hat on,’” recalls MacCormack, a managing partner at Imperial, where the firm had a specific focus on health care, for people and their pets. He requested his firm be considered in the investment sale process.

Months later, Imperial announced it was taking a substantial stake in VetStrategy, through two of its investment funds, helping to provide the vet chain with the capital needed to expand and reinforce its position as a leading provider of animal health services.

Litman says Imperial was more aligned with the company’s growth plans than other potential investors and liked the firm’s healthcare focus.

“Imperial really differentiated themselves from everybody else,” he says. “It felt like most of the other companies were talking about how we could fit into their box, and how they do things. With Imperial, it was more about how they could fit into ours. They believed in me and the organization. They wanted to follow my plan.”

MacCormack says the first two years were spent helping VetStrategy build up its management team, its governance, and its M&A capabilities.

“A lot of the effort was building the foundation for scalable growth,” he says.

Imperial also pushed management to be more creative with the business and more aggressive with M&A.

“It was outside my comfort zone,” says Litman, whose background included franchising, acquisitions, real estate, and development with Katz Group Canada, the company behind Rexall, PharmaPlus, Medicine Shoppe. “They pushed me, on all fronts: They got me to think in different ways.”

Under Imperial’s ownership, VetStrategy grew from having 15 clinics in four provinces to become Canada’s largest veterinary practices company with more than 165 clinics in nine provinces. VetStrategy also created 2,722 jobs over the past five years and 3,252 jobs since inception.

In August 2020, after a brief sale process, Imperial announced that it sold its stake in VetStrategy to Boston-based Berkshire Partners. It was Imperial’s second-largest deal after the 2018 sale of a major interest in Toronto-based DentalCorp., which acquires dental practices.

“We pushed the company as far as we could with the capital we had,” MacCormack says of the decision to sell.

“We were very pleased with the outcome in the sense that there was tremendous interest in the company and a great buyer in Berkshire,” MacCormack adds.

Litman says the Berkshire Partners investment has helped VetStrategy keep up with the growing demand for animal health services and has helped fuel its expansion. Today, VetStrategy has more than 235 clinics across the country.

“We’ve grown a lot in the past year and have taken advantage of the momentum that has been created,” Litman says.

Looking forward, Litman says he’s focused on creating a strong legacy for VetStrategy: “I want to support the people, and the veterinary community — whether it’s our hospitals or independent hospitals or people in academia. That’s really what we’re focused on,” he says.

He’s also proud to receive the CVCA Regional Impact Award with Imperial: “We are so thankful to Imperial for what they did to support us and allowing us to focus on doing things the right way,” Litman says.

“There are probably a couple of different ways somebody can go about getting this award: One is scratching and clawing and doing anything they can to grow and profit and leaving everyone in the dust and not caring about the collateral damage. Or, the right way, in my mind, which is doing it in the way we did, where we feel like we’re actually making a difference in people’s lives. To be able to do that, and be recognized for it, is very rewarding.”

MacCormack says his firm is honoured to receive the CVCA award for its work with VetStrategy.

“We feel good about having an impact on communities, the country and job creation,” MacCormack says.

“I think it speaks to the value of private equity to help grow companies. I sometimes think private equity can get mislabeled as being negative and cutting jobs. But that’s not how you actually make money in private equity. You make money by growing companies. I think this is representative of the benefit of having a value-added capital partner.”


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