THE CVS Group continues to grow, a fact reinforced by the recent announcement that it has made a number of further acquisitions in the current year.
In January it acquired a single site practice, Campbell’s of Swansea, close to its existing business, the Tawe Veterinary Group, which has three branches in the city.
This was followed in April with the acquisition of the five-site Attimore Veterinary Group, with its main centre in a veterinary hospital in Welwyn Garden City. The branches in Wheathampstead, Potters Bar, Hatfield and Woolmer Green all feed into this centre, which was one of the first purpose-built hospitals in the country, although it has been regularly updated over the years.
In May CVS purchased the Clarendon House Group with three centres, one in Writtle, Essex, one in Heybridge, Maldon, and the main facility located in a converted farm building with good parking just outside Chelmsford.
Simon Innes, the CEO, says that these purchases are all strategically important to CVS. They either provide better geographical coverage to supplement existing CVS practices or they enable the company to expand into new locations based on practices with a well-established reputation for quality service. Attimore was set up in the 1960s and Clarendon House in 1918!
Communal services
In the case of the Essex group, this had previously operated an equine facility from the main site in Chelmsford. CVS has structured its acquisition in such a way that the equine partner has been able to continue this business under his sole ownership, still located on the same site but sharing some communal services.
CVS was set up in 1999 by Brian Pound, formerly with Solvay-Duphar, and others and from the outset they have been able to maintain a constant stream of what they describe as quality acquisitions, mainly as a result of practice owners contacting the company directly.
Not all those applying have been acquired, says Mr Pound, as the company has some critical key priorities.
“The first is that the business must be well-established and have a proven track record; more importantly we want owners who wish to stay on post acquisition to remain a part of the team and thereby minimise the changes in service standards to clients.
“This has resulted in many different cultures existing throughout the group, but this is encouraged so that within communities the clients still have a choice. They can select the big hospital practice with extensive equipment and skills or go to the small, very personal service of the smaller “family type” practice.
“Yes, there are many uniform aspects of CVS’s policy and procedures, but this still allows the practices to maintain their unique culture,” Mr Pound says.
The future
Mr Innes states that CVS is still receiving enquiries at about the same rate as usual, and that amongst these are many excellent practices fully compatible with the CVS goals and ambitions.
“There is an emerging tendency for owners to work through agents or their accountants to manage the sale,” he continues. “CVS does buy some via this route but we need to be sure that the vendor has selected CVS not just for the value of its offer, but more importantly for its culture. It remains the company’s priority to find practices that meet its strategic goals. “Indeed, in some cases the company refuses to bid on a practice where the vendor’s sole aim is the highest price, irrespective of the impact on the future operation of the practice.”
Long term goals
Asked about his longterm ambitions for the business, such as how many practices he expected to acquire before CVS stopped buying and what percentage of the profession was likely to end up in “corporate” ownership, he said: “Whilst practices approach us, we will continue to acquire. Because CVS generates its own cash to buy practices and as that cash generation expands each year, our ability to acquire also grows.
“We have no theoretical limit but are aware that other groups are being formed where one local practice acquires its neighbour, and so on. We see this as a healthy development within the profession.
“We are also keen to encourage younger partners to consider buying out their older partners and thereby perpetuate the partnership principle. We will step back from an acquisition where this route has not been properly explored.”
Natural limit
Mr Innes believes that at some stage CVS will reach its natural limit. “I’m reluctant to put a figure on that but I expect corporate ownership to remain a minor segment of the profession for many years to come.”
Despite a variety of businesses now operating within the veterinary market, he does not expect them to dominate the profession in the foreseeable future.
“The determining factor, he said, “is the quality of service provided to the clients and their pets. The public is very discerning about what it expects.”
In his experience, if any practice, including those owned by CVS, does not meet those expectations, it will lose clients. “The dominant expectation of the public is that vets are part of a caring profession. No one will succeed unless they maintain an environment where this is their prime focus.”
Asked about the future of the profession, Mr Innes said that more and more people would use the internet to buy their drugs and other products and CVS had seen an increasing request for prescriptions.
He expects that this will increase still further and for this reason CVS has set up its own internet pharmacy, which includes a veterinary surgeon on its staff to provide advice and help. It is designed to capture a portion of the lost sales at practice level. “I do not want to see these sales going to foreign pharmacies or those run by people with no connection to the veterinary profession,” he says.
The second big change is the increasing use of loyalty schemes where practices reward regular clients by discounting certain services. This will affect profitability but, most importantly, help to secure long-term client loyalty.
The third change is the increase in the number of referral centres, with most areas now serviced by referral centres offering most disciplines.
“CVS has a number spread around the country and the mid-term aim is to become self-sufficient by covering all key disciplines in each region. With over 200 practices in the group, this is already a large captive source of referral business,” he says.
“My view is that the profession will continue to expand the services and skills that it provides, which must bode well for the future health of the animals under our care.”
