LAS VEGAS — During SUPERZOO 2023 from Aug. 16 to 18 in Las Vegas, four women leaders in the pet care industry offered advice to emerging businesses during the “Navigating the Pet Industry” panel held on Aug. 17.
Panelists included Carol Frank, an industry veteran and managing director of BirdsEye Advisory Group; Alex Waite, co-founder and chief innovation officer of Shameless Pets, a pet food company specializing in using upcycled foods; Colleen Wilson, founder of Pets on Q, an animal talent agency; and Jamie Damato Migdal, founder and chief executive officer of FetchFind, an e-learning platform.
Beginning the discussion, Frank shared advice specific to mergers and acquisitions.
From pet healthcare services to nutrition, all facets of the pet industry have become hot targets for buyers seeking to get a piece of this extremely lucrative market. For those emerging businesses entertaining possible M&As, making a business attractive is paramount. According to Frank, attractive pet businesses for buyers include those that appeal to the hottest segments of the industry, which is currently any product or service that targets the youngest subset of pet parents: Gen Zers and Millennials.
Strong financials are also an indicator of an attractive business, such as companies with strong gross margins and those that have witnessed double-digit growth. While making use of opportunities is important when expanding a business, pet companies need to ensure that many growth opportunities remain for the business ahead, according to Frank. Buyers are less likely to invest in a business that has already used up its opportunities for growth.
Business differentiation is also a key factor for buyers as they seek businesses that cannot be easily replicated. For emerging pet companies, this means that innovative products, especially those carrying patents or any intellectual property, are extremely valuable to buyers, according to Frank.
When a buyer expresses interest in a pet business, Frank shared three key moves to successfully exit the pet industry: establish a line of succession; ensure all financials are in place for due diligence purposes; and partner with a firm, like BirdsEye Advisory, to help with the process.
Jumping off Frank’s advice, Waite shared her top tips for pet businesses: build a healthy gross margin from the start and have a keen eye for a product’s price point.
For emerging pet food and treat companies having to tackle a volatile ingredient supply chain, establishing backups for every single ingredient and staying informed on trends in ingredient markets are key to helping stay ahead of supply chain disruptions, according to Waite.
In addition to M&A advice and pet food specific insights, the panel discussed the biggest challenge facing the entire pet care industry — labor. The labor landscape is changing — not just for pet products, but for a variety of industries — and it’s not just a result of COVID-19.
According to Damato Migdal, further specialization within the pet industry is beginning to cause issues with employee training and education. As the industry continues to evolve to meet specific consumer demands, specialization will continue to infiltrate all facets of the industry, making it paramount for emerging businesses to home in on their labor force and ensure proper education.
Despite the challenges facing pet food and treat processors today, continued M&A interest and a wealth of innovation seen across the show floor make it clear that this industry is thriving even under punches.
Read more of our coverage from SUPERZOO 2023.