Scott Hunter founded Gateway Pet Memorial in 1996 in Guelph, Ontario to fill a gap that he saw in the emerging pet aftercare services market. Over the next two decades, Gateway became an established leader in the industry with four locations across the province. Recognizing the strong industry tailwinds behind the humanization of pets and that the high degree of fragmentation within the sector was creating a significant opportunity for expansion, Scott was entertaining expansion across Canada when, in March 2015, Imperial Capital approached him about a potential partnership. 

 “We proposed a majority investment in Gateway in partnership with Scott and with a vision of executing an expansion plan across Canada and the U.S.,” says Imperial Capital Partner Justin MacCormack. After Hunter agreed to the deal, the Imperial team began working with him on a strategy to expand via organic growth as well as acquisition and new site development. Over the next seven years, they also implemented a number of value creation projects, such as: 

• Developing a highly successful track record of entering new markets and competing through M&A and new site development
  
  
• Continually emphasizing the importance of exceptional service quality and operational excellence, resulting in a customer attrition rate in excess of 95 percent and an exceptionally high net promoter score of above 85
  
  
• Driving strong double-digit organic growth over multiple years with new account wins, new premium service offerings, pricing optimization, and a consumer-driven shift to a new pet parent-focused service line
  
  
• Investing heavily in a Gateway’s proprietary ERP system that provided a differentiated and high-value service to veterinary clinics and that enabled Gateway to offer the best turnaround times, high service levels and to save veterinary clinics time; this led to the highest overall customer satisfaction in the veterinary industry for pet aftercare

As a result of these and other initiatives, Gateway grew from its original four locations to a national footprint of more than 125 care centers. Collectively, those care centers had more than 1,800 employees who provided services to over 3 million pet parents annually as well as to thousands of U.S and Canadian veterinary clinic partners — all while maintaining and growing its net promoter score. During this time, the company also grew its revenues from under $10 million to over $300 million.

“Imperial was fantastic to work with,” says Hunter. “They’re great people who brought the strategic and financial expertise necessary to scale the business. Plus, they always respected my industry expertise, regularly sought my input, and gave me the latitude to run the company’s day-to-day operations the way I saw fit. They were truly collaborative, just like you’d expect any great partner to be.”

In March 2022, Gateway acquired Regency Pet, a major player in the pet aftercare space, in a transformational transaction that created significant opportunities for continued growth. Given that Imperial had already been invested in Gateway for seven years and would need to extend the investment period to continue to expand on the vision for the Company, the Imperial team began weighing its options. “Ultimately, we determined that a continuation fund was the most appropriate option,” said MacCormack. “It was the best way to ensure that we could satisfy our commitment to finding a liquidity option for investors while also offering optionality to stay invested in Gateway through its next stage of growth.” 

Shortly after the Regency acquisition closed, in April 2022, Imperial began evaluating liquidity options for its investors and running a market process to identify investors as potential participants in a transaction. This led to multiple offers being submitted, including one from ICG, a U.K.-based global asset manager with more than US$70.0 billion in assets under management. In the fall of 2022, Imperial Capital entered into a binding agreement for ICG to invest US$760.0 million of equity into the continuation fund alongside roll-over investors from Imperial Capital Fund VII and management.

“This transaction extends Imperial Capital's long-term partnership with Gateway's exceptional team, which is well-situated to continue building on its position in the pet aftercare sector,” says MacCormack. “We are thrilled with the extraordinary result and congratulate the management team for the diligence that led to an exceptional outcome.”

Hunter agrees. “When we first started on this journey together, I never could have imagined that we’d  exceed the ambitious goals we set for ourselves, have such a tremendous outcome or build a company I’d be so proud of. It’s been an amazing ride.”