Ben Shaw, CEO of Vets First Choice

I don’t like to peddle in speculation, but I believe my headline poses a fair question given some recent activity at the Portland company.

Going public is a big deal for any company. It requires months of preparation that can offer hints of its intentions to those paying attention.

Vets First Choice, one of Maine’s most successful startups of the last half-dozen years, is exhibiting some of those telltale signs.

Within the last few months, the company began looking to bring onboard a new corporate counsel. Included in the job posting is this revealing sentence: “Public company experience in a growth stage company required.”

Rather than beat around the bush, I asked Ben Shaw, the company’s co-founder and CEO, about the job search and whether the company is preparing to file an S-1 (the paperwork a company must file with the SEC to signal its intention to sell shares to the public) in 2017. Shaw’s response, I think, is telling.

“We have several open job postings which are fairly specific about job experience/expertise and we have publicly participated/presented at major key investment conferences this year,” Shaw said. “However, neither is a guarantee of our plans, and we are maintaining optionality.”

So the company is making the rounds at major investment conferences and advertising for executives with public company experience, but is still leaving its options open. That’s fair. Not every company that explores the possibility of going public follows through on the process. After all, while going public can raise a lot of working capital for the company, being publicly traded, and the scrutiny that brings, also comes with a lot of headaches (which is why you see more and more high-growth tech companies remaining private).

Shaw then made it clear, though, what he really thinks.

“I think Vets First Choice is capable of and prepared to operate as a public company,” he said.

A good candidate to IPO

Ever since Tim Ludlow, Vets First Choice’s CFO, spoke at a PubHub last spring, I’ve had my money on the company providing Maine with its next big liquidity event.

Founded in 2010, Vets First Choice provides online pharmacy services for veterinary practices (basically allowing your local vet to have its own fully-stocked online pharmacy to compete with major online pet drugstores like 1-800-PetMeds and Petcarerx.com).

The most recent official revenue figure we have is from last year’s Inc. 5,000 list, in which the company ranked #1,232 and reported 2015 revenue of $60.9 million. We have some sense of how that number has grown, though, from Ludlow. He suggested during last spring’s talk that its revenue had grown at the same rate as its employee count, which had reached 300 companywide at the time of his talk. After doing some math, which I go more into detail in last year’s article, it’s a safe guess that the company has surpassed $100 million in revenue.

Reaching $100 million in revenue has traditionally been a milestone that signaled a private company’s readiness to go public. That revenue threshold is less important these days as high-growth startups have had success raising millions of dollars (sometimes billions in the case of Uber) from private sources. But for the sake of this article, let’s assume Vets First Choice checks that box.

Other evidence that the company is a good candidate to IPO:

The company already has an executive with public-company experience: Ludlow himself. He was previously assistant treasurer and vice president of corporate finance for Bristol-Myers Squibb (NYSE: BMY).

Vets First Choice, which has raised more than $60 million, has investors and advisors with vast experience taking companies public.

  • David Shaw, Ben Shaw’s father, took Idexx (NASDAQ: IDXX) public in 1991 and is an investor in Vets First Choice through the Black Point Group.
  • Polaris Partners, which led an early $4 million investment round in Vets First Choice in 2012, has helped shepherd more than 30 of its portfolio companies through the IPO process.
  • HLM Venture Partners, another investor in Vets First Choice, also has experience helping portfolio companies prepare for an IPO.

These investors have board seats and have demonstrated their fondness for companies that take the IPO route.

And, finally, while not a sign a company is preparing to go public as much as it is a sign of the company’s stability, its largest investor is a private equity firm. New York-based Clayton, Dubilier & Rice led a $52 million investment round in the company in 2015. Private equity firms, as opposed to VC firms, usually (no hard and fast rule, but usually) invest in more mature, stable companies, which also happen to be the best candidates for entering the public markets.

So, as Ben Shaw told me, Vets First Choice appears prepared to pursue an IPO. The question remains whether it wants to or not.