Private Equity Is Coming for Your Pets

In October, a historic industrial dispute by veterinary workers in South Wales in the UK suffered a devastating setback, with the employer VetPartners announcing the sudden closure of four clinics where staff had been agitating for measures to address low pay and poor working conditions.

Traditionally a poorly unionized sector, the veterinary industry has seen a recent surge in union membership with Unite’s British Veterinary Union, a national branch representing workers in hundreds of workplaces, seeing a rapid rise in membership.

Veterinary workers include veterinarians and qualified nurses, but also administrative and supportive staff, many of whom are increasingly squeezed by low wages and poor terms and conditions. Unite the Union reported some of these workers using food banks amid a cost-of-living crisis, with wages failing to keep up with inflation despite a boom in pet ownership and a spike in the cost of veterinary treatment.

This is not just a straightforward dispute for pay and conditions, however. The plight of these workers is inextricably linked to the recent widespread purchase of veterinary practices by private equity firms, with large companies now owning nearly 60 percent of UK practices. It seems there is almost no physical asset, firm, or piece of infrastructure from which the rapacious private equity sector won’t attempt to extract income.

From children’s homes to football clubs, private equity now holds a significant stake in the services and entities we use and relate to on a daily basis. As economist Brett Christophers has contended:

[Asset managers] own, and extract income from, things — schools, bridges, wind farms and homes — that are nothing less than foundational to our daily being. . . . Asset managers increasingly own and control our most essential physical frameworks, providing the most basic means of social functioning and reproduction.

For many, seeking veterinary treatment for their dog now falls within this realm.

“Private equity” refers to an investment model where large funds, managed by professional investors, purchase non-stock-market-listed assets with a view to quickly increasing their headline value in order to make a profit selling them — much like flipping houses, but with businesses. It is important to note that for private equity, the social purpose of an asset — or even its long-term ability to deliver a quality product or service — is entirely secondary to the change in its market price between purchase and resale.

This shift in the veterinary sector from a small business to an asset management model has worsened pay and conditions in an industry already struggling to recruit and retain staff. Arguments in favor of private equity takeovers include the idea that failing businesses can be turned around and management streamlined. More often, they are associated with slashed terms and conditions and wide-scale asset stripping. Infrastructure, including utilities like water, can be an attractive investment for private equity and other asset management funds because of their ability to generate a constant state-backed cash flow.

However, private equity is especially known for its brutal targeting of small, medium, and even large commercial businesses. Wages, terms, and conditions are slashed, prices are raised, and business practices outside of core profit drivers are axed, regardless of their benefit to the community. Even more concerning is the short-termism of this shadowy speculation, the ultimate aim often being to consolidate debts and resell the business at a profit within months.

What does this mean for local people simply trying to access affordable veterinary care for their animals? Four practices have now been shut down, depriving Welsh communities of basic access to a vet. VetPartners, owned by private equity fund BC Partners, claim that the closures were due to recruitment shortfalls, but there are rumors of pressure by other investors to stamp out industrial militancy early and avoid trade unionism rippling out across the sector. For companies seeking rapid extraction of income, collective bargaining could seriously undermine the efficiency of this model, which would explain the ruthless treatment of attempts at union action by many private equity owners.

A case in point is the GMB union’s campaign against the private equity owner of supermarket chain Asda. TDR Capital bought the chain in 2021, along with another buyer, in one of the biggest debt-leveraged takeovers in history. But after loading on more debt to the tune of over £6 billion, while overseeing what the GMB described as a “steep decline” in health, safety, and food hygiene standards, the company is now grappling with a massively reduced market share and looming mass redundancies. This kind of reckless profiteering has been traumatic for the 145,000 people employed by the supermarket. But it also shows an irresponsible disregard for the chain’s future, with its share in the grocery market plunging to a thirteen-year nadir of 11.8 percent. The effect is a vicious circle of debt, low wages, and poor market performance.

In these conditions, efforts of Unite members at VetPartners to unionize and challenge ruthless employer practices are to be commended. But the closures speak to the deep and troubling impact of private equity on the veterinary industry, local high streets, and the services that ordinary people hold dear. Any meaningful attempt to prevent private equity wreaking havoc on long-term and indispensable local infrastructure will require concerted trade union power. Trade unions have a much greater vested interest in the long-term viability of the industries they organize than any asset manager out for a quick buck.

However, reining in the worst excesses of private equity will also involve serious efforts to scrutinize and regulate these companies by central government. This seems unlikely from a chancellor who fraternizes with BlackRock executives and continually reassures investors that the sole purpose of government activity is to “crowd in” private finance to our already over-privatized economy. Perhaps our chancellor should spend less time with CEOs and more time on the picket line in South Wales.