Your Primer to Healthcare Mergers and Acquisitions

Category: Market Trends

Market Trends
5 Key Healthcare M+A Transaction Deal Terms Sellers Should Know

It's January, so many of you may be reading this article for guidance on your 2023 M+A plans. Right about now, your internal dialogue may sound like, "I want to retire soon but the economy seems unstable, so why would I sell before it corrects?" Indeed, economic and industry indicators are mixed, almost like an economic whodunnit mystery with fingers pointing around the circle of suspects, all awaiting Sherlock to tell us when to initiate an exit. But if you step back from the scene of the crime, you will notice the partygoers are all buyers and sellers who share the same intention: to complete M+A transactions.

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Healthcare Sectors, Market Trends
Reflections on Healthcare M+A in 2022 and Expectations for 2023

2022 proved to be a year that did not live up to everyone’s expectations. Riding on a wave of furious M+A activity in 2021, the initial optimism was met with bewilderment as buyers became increasingly selective and cautious in the transaction process as they sought to mitigate risk.  Deals that were expected to be straightforward experienced headwinds that led to a less-than-robust conclusion to the year.  Larger global economic issues, the continuing pandemic, and uncertainty in the political sphere undoubtedly influenced the healthcare M+A market.  However, we are already seeing signs of change in 2023. Deal activity is up and buyers still have a lot of dry powder to deploy.  The VERTESS team is pleased to offer its annual year-end review as well as the future outlook for each of the healthcare verticals our Managing Directors support.  We look forward to new challenges and successes in 2023!

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Healthcare Sectors, Market Trends
Factors Contributing to Behavioral Health Growth & Transaction Activity

It's been a wild ride for M+A activity in the healthcare space these past few years, with several significant global and domestic issues impacting deal flow. The effects of the COVID-19 pandemic will be felt for a long time. Russia's invasion of Ukraine has created global uncertainty. Domestic inflation has created cautious investors. Labor shortages have decreased profits for many providers.

All of these weighed down the healthcare space, yet it's estimated that of the $1.6 trillion in "dry powder" (i.e., unspent capital) globally, 15% is expected to be allocated to healthcare. And of that 15%, I expect a good percentage to go toward behavioral health.

Following the lull of transaction activity that affected all of healthcare in the first several months of the COVID-19 pandemic, the behavioral health space has experienced fairly steady transaction activity, including some large deals that had ripple effects throughout the space.

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Healthcare Sectors, Market Trends
Market Pulse: Behavioral Health & I/DD

In this column, I'm going to share my thoughts on today's behavioral health and intellectual and developmental disability (I/DD) markets. I'll speak to the macro environment because those issues are impacting the decisions of buyers and lenders. In turn, these issues impact the values buyers are willing to pay for your company. I’ll also address how you, as an owner in this space, can use this information for your own planning purposes — that is, how to do what’s best for you.

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Healthcare Sectors, Market Trends
Healthcare Technology: Update on Growth and Investments

In September, VERTESS Managing Directors, joined by members of the business development team, attended three national conferences: Cape Cod Symposium on Addictive Disorders, The National Association for Specialty Pharmacy Annual Meeting, and The Home Care Association of America Annual Leadership Conference. Dominating the tradeshow floors were exhibitors in the healthcare technology space. We estimated that these companies accounted for 40-60% of the exhibitors — a common thread intersecting the three different verticals represented at the meetings.

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Healthcare Sectors, Market Trends
SUD Buyer Study: Key Takeaways for Healthcare Business Owners

The information covered in the following column is derived from two sources. First, VERTESS recently conducted a survey of more than 20 buyers of substance use disorder (SUD) treatment providers on a variety of topics, including acquisition strategy and market trends. Second, I engaged in extensive discussions with fellow VERTESS team members who collectively are heavily involved in the private capital markets and witness the cycles in the verticals we represent.

My intentions in this column are to articulate broad concepts in current trends and developments within the broader healthcare M+A markets. While I am writing for owners of all healthcare businesses, there is a special emphasis on owners of SUD treatment businesses since the survey conducted was with SUD buyers and SUD is an area in which I specialize. SalientValue also has articles on general recommendations for healthcare business owners and vertical/segment specific articles outside of SUD.

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Healthcare Sectors, Market Trends
Mark Cuban Cost Plus Drug Company: How Will it Affect Retail Pharmacy?

About six months ago, the Cost Plus Drug Company, entrepreneur Mark Cuban's online pharmacy, officially launched. As of late, the pharmacy is receiving significant media attention, including a study published in the journal Annals of Internal Medicine which showed Medicare could have saved nearly $4 billion in 2020 by purchasing generic drugs at the same prices offered by Cost Plus. Cuban took to Twitter to share the results with and tag President Joe Biden and other elected officials.

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Exit Planning, Market Trends
Perspectives on Selling Your Healthcare Business in the Coming 24 Months

In this SalientValue column, I'm going to touch on a number of points I hope healthcare business owners will find helpful as they consider the current position of their companies and plan for their futures. There are warning signs ahead, and having been through the ups and downs of various business cycles, I'd like to highlight some concerns and share some recommendations.

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Healthcare Sectors, Market Trends
When Is It Time for an ASC To Consider a Strategic Partner?

The ambulatory surgery center (ASC) market is changing rapidly. Surviving in the current market is no longer as simple as meeting the needs of the community you serve. Competition among ASCs is now measured through a litmus test of strength based on collateral along with quality standing. These are now the deciding factors that determine winners and losers in the market.

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Healthcare Sectors, Market Trends
How Artificial Intelligence is Reshaping Healthcare: 10 Key Takeaways

The pandemic brought rapid and tremendous disruption to the healthcare industry, forcing the healthcare ecosystem to account for new pressures and challenges. The disruption also compelled many companies to halt or slow their short- and long-term plans and evaluate what they could do better and how they could achieve the improvements needed to support a struggling healthcare system. 

As we transition out of the pandemic or continue to learn how to live with COVID-19, now is the time for healthcare providers and medical device companies to shift from responding to the pandemic to recovering from it. Organizations and companies that understand this evolving demand curve will need to substantially change the way they plan strategically, and that includes incorporating virtual components or expanding their usage of these solutions. What is apparent is that the recovery from the pandemic will be partly — if not heavily — fueled by the development and integration of new technologies, particularly those powered by artificial intelligence (AI) and machine learning.

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Market Trends
Key Considerations for an Acquisitive Healthcare Growth Strategy

Is your healthcare organization thinking about focusing on acquisitive growth? Before you go all-in on the strategy, read on. This column will help you gain a better understanding of the strategy's defining qualities and what is typically required for success.

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Healthcare Sectors, Market Trends
Reflections on Healthcare M&A in 2021 and Expectations for 2022

Every January, as we begin conversations with healthcare business owners who are considering the sale of their companies, we are often asked about the previous year's market and what predictions we can offer for the new year.  2021 offered some continuing challenges due to the ongoing global pandemic, but there was still significant activity in healthcare M&A.  While 2022 is still just days old, VERTESS is keenly aware of developing trends that we believe will continue throughout the year. As each VERTESS team member has a long history in specific healthcare sectors, we are reviewing the previous year for each of those sectors as well as some projections for 2022. 

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