Posted on April 20, 2008 by Jayne E. Juvan

The Numbers Are In: First Quarter 2008 HC M&A Activity Sluggish

The April 2008 issue of the Health Care M&A Monthly (subscription only publication) reports the announcement of 219 health care transactions in Q1 2008, down from the activity in both Q4 2007 (301 deals, down 27%) and Q1 2007 (237 deals, down 8%).  Biotechnology, pharmaceutical and medical device deals account for almost 75% of the deals announced, while home health, managed care, hospitals, long term care and behavioral health transactions collectively accounted for only about 8% of the volume.  The authors recognize that the decline is due, at least in part, to the credit crunch and the fact that activities of financial buyers have slowed, but point out that health care tends to be anti-cyclic and that the industry is still very much in need of consolidation.  Make sure to check out the full report for additional analysis on these and other industry trends.  For those who closely follow HC M&A activity, you may want to consider a subscription to this publication, as I have found the analysis to be very good.

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Posted on April 14, 2008 by Jayne E. Juvan

2008 Healthcare M & A Trends: Highlights from The Deal's Healthcare Dealmaking Symposium

The Healthcare Dealmaking Symposium recently held by The Deal in New York City offered great insight into 2008 M & A trends in the health care space. One of my colleagues was in attendance and provided me with a brief overview of the major themes from event.  For those of you following health care M & A trends who couldn't attend, I would encourage you to check out online coverage of the event, as The Deal includes top notch video footage clips of several of the lead presentations. 

I'm sure it will come as no surprise, but the collapse of the credit markets seemed to take center stage.  An article from The Deal's web site entitled Healthcare Dealmaking Symposium: 12 Month Outlook quotes Russell L. Carson, co-founder of Welsh Carson, Anderson & Stowe, who summed up investor sentiment when he stated, "I don't think we want to do anything today that's reliant on capital markets to close.  There won't be a lot of $5 billion-plus deals by private equity firms until the credit markets unfreeze, and I don't see that happening this year." 

Other deals may be slow to take off as buyers and sellers continue to find themselves at a pricing standstill.  Sellers still expect 10-12 x EBITDA, while buyers are looking for multiples in the range of 6 to 8. 

According to panelists, strategic buyers with a lot of cash on hand are well positioned, followed by PEs and SPACs.  The hottest space in health care will likely be pharma, med tech, diagnostics, biotech and companies that focus on cost-containment. 

I'll be in attendance at the conference sponsored by iiBig at the end of the month entitled Investment and M & A Opportunities in Healthcare: Generating BIG Returns in a Fast-Growing Sector and will provide coverage of the trends highlighted at the conference.   For those of my readers who will also be in attendance, I look forward to seeing you there!

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