United States

A note of caution, as health care M&A activity remains strong

Q1 2016 Health Care Industry Spotlight

INSIGHT ARTICLE  | 

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Buyers of health care companies are becoming more cautious, focusing in on regulatory issues, economic concerns and reimbursement changes in specific sectors in health care. The extent to which that caution will affect overall deal flow will be best assessed once more time has passed, but it is important to note just how much competition there is for prime targets, which is generating higher valuations and contributing to the massive quarterly totals seen throughout 2015. In light of such figures—and the surge in volatility worldwide that marked the end of 2015—additional scrutiny on the part of buyers makes sense.

Key highlights from 2015:

  • 2015 saw over $330 billion in closed transactional value; the first three quarters of last year saw over $70 billion in deal value apiece.
  • Private equity (PE) activity reached a 10-year high in 2015, eclipsing 500 closed investments. Total investment value was historically strong, with the year’s $66 billion putting it at the third-highest for the decade.
  • It is difficult to overstate how active PE sellers have been over the past two years, which combined, have seen 288 exits in the health care space. 2015 alone saw 161, an increase of 27 percent over the prior decade-high in 2014.

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