s we’ve moved into 2026, the pet care industry is showing early signs of recovery from last year’s revenue challenges. Yet for facility owners contemplating an exit, the lessons of 2025 remain critically relevant: Strong EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) matters more than revenue growth when it comes to commanding premium valuations.

The 2025 Reality Check

Last year served as a watershed moment for pet resorts. Revenues stagnated or declined across most markets as fundamental shifts reshaped the competitive landscape. Pet owners diversified their spending across multiple providers, app-based platforms continued capturing market share, and Gen Z pet parents increasingly integrated their dogs into work and travel plans, reducing boarding and daycare demand.

But the real story wasn’t revenue softness—it was margin compression. Labor costs continued their climb (most states being burdened by yet another minimum wage increase in January of this year), while many operators hesitated to implement corresponding price increases due to consumer pushback, resulting in severely squeezed profitability.

What Buyers Actually Want

The M&A market’s response to 2025’s dynamics has been instructive. Consolidators adopted an unambiguously selective stance focusing squarely on quality over quantity.

Here’s what emerged as non-negotiable for premium valuations: healthy EBITDA margins, disciplined labor management, operational efficiency and staff stability. Modern facilities commanding premium pricing from pet parents also rose to the top of buyer wishlists.

Notably absent from the must-have list is aggressive revenue growth. While acquirers certainly prefer growing top line, they’ve demonstrated willingness to pay a premium for well-run resorts with strong EBITDA margins—even in flat or modestly declining revenue environments. Strong margins equal a strong and resilient business model that can withstand fluctuations.

The EBITDA Enhancement Playbook

Whether you’re planning an exit in 2026 or simply positioning for future optionality, the path to maximizing business value runs through EBITDA optimization, and here’s how.

Labor Cost Management
Labor represents your largest expense and your greatest opportunity for margin improvement, which is why you should:

• Establish (and adhere to) a strict occupancy-based scheduling model that maximizes labor hours.
• Right-size your team based on actual utilization patterns, not theoretical capacity or for fear of losing team members.
• Implement workflow improvements that maximize output per labor hour. For example, analyze your resort’s “flow” from opening to closing and look for efficiencies and improvements.
• Ensure pay scales reflect market realities while incorporating performance-based incentives for management-level employees. Incentives should always tie to a specific payroll ratio while contemplating the safety of pets.

Revenue Rationalization
Not all revenue is created equal. Conduct a hard-nosed analysis of every service offering with a goal to:

• Identify and eliminate or raise prices on high-labor service offerings that made sense historically but now destroy margins given current labor costs.
• Concentrate resources on high-margin services that clients value and willingly pay premium prices for.
• Avoid chasing revenue that comes at the expense of profitability regardless how “fun” the service could be. Just because a handful of clients ask for a specific service does not mean it’s in high demand.
• Consider membership models that produce monthly recurring revenue while increasing customer “stickiness” and loyalty.

Operational Discipline
Extract maximum efficiency from existing operations through:

• Standardized processes that ensure each team member completes the same task the same way in the same time, each time
• Reviewing dog movement patterns and how they could be made more efficient
• Technology integration that reduces administrative burden (online booking, AI, etc.)
• Strategic occupancy management to maintain premium pricing, especially during peak season

Current Selling Market Dynamics

While some operators are experiencing revenue rebounds in early 2026, consolidators remain highly selective. The facilities that get multiple offers (and highest multipliers) share consistent attributes: strong EBITDA margins, tightly managed labor cost, stable teams and modern facilities in high-density areas.

For owner-operators of lifestyle properties, improving financing conditions are beginning to activate the individual buyer market that remained largely dormant during the high-interest-rate environment of recent years.

Taking Action

If you’re contemplating a sale within the next 12-24 months, the work begins now. Business value enhancement isn’t achieved overnight—it requires sustained focus on margin improvement and operational modifications.

The good news is that you control the variables that matter most. Revenue may be subject to market forces beyond your influence, but labor efficiency, cost discipline and EBITDA optimization are entirely within your power to execute.

Teija Heikkilä founded PET|VET M&A, Sales & Advisory (formerly National Kennel Sales & Appraisals) and has been a pet care industry pioneer since 1990. Originally from Finland, she has built a 34-year career driven by deep industry passion and expertise. Since founding the company in 2007, Teija has facilitated 285+ successful pet business sales totaling $530MM. She has been at the forefront of industry consolidation from its inception. Teija holds the Certified M&A Professional (CM&AP) and Merger & Acquisition Master Intermediary (M&AMI) designations and is a Licensed Real Estate Broker in over 20 states.