Second Quarter HC M & A Activity Promising
The decline of deal activity during the first quarter of 2008 weighed heavily on the shoulders of many in the health care industry. Just a few months back, I attended iiBIG's Investment and M&A Opportunities in Healthcare Forum, and the news from the street was sobering - deal activity was down, even in the health care space, and the pain inflicted by the credit crunch took center stage. Despite the somber tone, one message (an obvious message to many, I'm sure) still left a glimmer of hope - health care, more than most industries, is somewhat recession proof, leading many analysts to believe that there may be an uptick in deal activity in the months that lie ahead.
An article recently released from Reuters, which examines data published by Irving Levin Associates, suggests that these analysts may be correct and that some of the bleeding in the health care sector has subsided, at least temporarily. Unlike most of the headlines of stories in leading publications such as the New York Times (from the Dealbook: "Hedge Fund Manager Describes Rock Bottom," and we can't forget the stories of bloodletting and the images of the MIT grad standing on the street corner with a sign begging for work), the article's title is positive, upbeat, and hopeful ("Second Quarter Health Care M&A Strongest In Years According To New Report From Irving Levin Associates, Inc.").
The article boasts that, "based on preliminary figures, a total of $85.5 billion was committed to fund the second quarter's M&A activity, a 209% increase over the prior quarter's $27.7 billion. It is also a 25% increase over the $68.3 billion spent in Q2:06 and a 39% increase over the $61.3 billion spent in Q2:07. Despite the slow-down in global M&A, activity in the health care industry is robust and on the rise."
No, you're not seeing things - the article really says that health care M&A activity is robust and on the rise. And I promise - the article was just written and reports 2008 data - not 2007 (yes, I double checked)!!
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As an aside, I can't help but to note another positive article published today - the so called silver lining to the skyrocketing gas price crisis. Indeed, an Associate Press article entitled "As Gas Prices Go Up, Auto Deaths Drop" states that "Professors Michael Morrisey of the University of Alabama at Birmingham and David Grabowski of Harvard Medical School said they found that for every 10 percent increase in gas prices there was a 2.3 percent decline in auto deaths. For drivers ages 15 to 17, the decline was 6 percent, and for ages 18 to 21, it was 3.2 percent."
