Doctors, veterinarians inject profits into equity investment; local veterinary clinics, doctors' group prove solid holdings.

AT first glance, there might seem to be little similarity between the nation's largest privately owned chain of veterinary clinics and the state's second largest medical group.

But for Dr. Craig Frances, his private equity firm's stakes in two Los Angeles area companies--National Veterinary Associates and HealthCare Partners Holdings LLC--have a lot in common.

"These organizations are run by doctors who understand how to build a culture that's good for the providers," said Frances, who heads the Palo Alto-based health care practice of Summit Partners LP and sits on the boards of both companies. "It's really the way health care should be delivered in our country, with the doctors in control of the care."

NVA, founded in 1996 by Chief Executive Stan Creighton, received its initial investment from Willis Stein & Partners. Summit's $128 million investment earlier this month enabled Willis Stein, a Chicago firm, to cash out and will enable NVA to add to its network of 96 animal hospitals in 29 states. Two clinics are in the Los Angeles/Orange County area.

Creighton, a veterinarian for 24 years before founding the company, said NVA differs from other animal clinic chains, including publicly held, Los Angeles-based VCA Antech Inc., in that it doesn't brand its acquisitions. His goal in founding the company was to enable vets to get value from the businesses they've established and still continue to practice medicine.

"We rely on the local reputation that the original owner has established," said Creighton, noting that at least two-thirds of his vets stay on at their practices for years after cashing out. The company has been buying around eight animal hospitals a year, a pace that should accelerate with the Summit's investment. Summit also plans to beef up NVA's corporate development infrastructure to better identify and pursue acquisition candidates, Frances said.

Summit, which has raised nearly $9 billion in private equity and venture capital since its founding in 1984, has a track record of helping Los Angeles companies grow. Its technical expertise and two-year-old, $75 million minority stake has helped Torrance-based Health-Care Partners expand outside California with acquisitions last fall in Florida and Nevada.

A third Summit investment, Azuza-based specialty cosmetics company Physicians Formula Holdings Inc., went public last year and now trades at around $21 a share. Last week it closed a 4.39 million share secondary offering that enabled Summit to exit its stake, although Frances continues to sit on the board.