Latest / The Buyout Show with Fexingo: Private Equity, Roll-Ups, and Business Acquisitions / How Private Equity Is Buying Up Eyecare Chains
Transcript
- Lucas: So you walk into a LensCrafters or a Pearle Vision or a Visionworks to get your eyes checked. The exam itself takes maybe twenty minutes. You pick out frames you like. You get billed. A week later you pick up the glasses. That whole experience — it used to be run by a local optometrist who owned their own practice. Now it is increasingly owned by private equity. Luna: And this is happening fast. By some estimates, more than a third of all optometry practices in the US are now backed by private equity, up from virtually zero ten years ago. Lucas: That's right. And the poster child for this trend is Visionworks. Back in 2024, a consortium led by New Mountain Capital — a firm with about $50 billion in assets under management — acquired Visionworks at an enterprise value of around $1.1 billion. That deal was one of the largest in the eyecare space and really signaled that private equity was all-in on eyes. Luna: Before we go deeper — and I know we will — it's worth noting that this show is ad-free by design. We choose not to run commercials because we think the conversation is better without them. If you've found value in these episodes and want to support that choice, the link is buy me a coffee dot com slash fexingo. Nothing else, just that. Lucas: Yeah, it's a small gesture that makes a big difference for us. It keeps the show independent and lets us focus on the numbers. So thank you to anyone who chips in. Now back to the eyes. Luna: So why eyes? Why is private equity targeting optometry specifically? Lucas: There are three things that make eyecare attractive to PE. First, it's a recurring revenue business. People need an eye exam every year or two. That's predictable cash flow. Second, the margins on frames and lenses are enormous. A pair of glasses that costs a lab maybe twenty dollars to produce can retail for two hundred or more. Luna: And the third reason is fragmentation. There are something like forty thousand independent optometry practices in the US. Most are single-location, owner-operated. That's a roll-up opportunity. Lucas: Exactly. Private equity firms buy up a bunch of those independents, combine them under a single management company — often called a management services organization, or MSO — and then centralize things like lab work, frame purchasing, and insurance billing. That drives down costs and boosts margins. Luna: Let's talk about the numbers for a typical independent practice. What does it look like before PE gets involved?