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Private equity: Healthcare’s new growth accelerator [1]

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Date: 2022-08



A private equity sector bursting with cash and searching for deals means more of that money has flowed into the healthcare system over the past decade. In 2009, private equity firms completed over 200 healthcare deals, and by 2016 this had tripled to more than 600 deals.

The healthcare industry saw a high level of deals in general in 2017 and 2018, involving both private equity and corporate buyers. As those deals are completed, many may be looking to sell noncore business units, prime targets for private equity firms looking for a proven business model and solid cash flow.1,2 Private equity’s purchases of healthcare divestitures are expected to continue in 2019 as the sector looks to invest the cash it has raised, a reported $624 billion ready for investment across industries as of July 2018.3

Private equity firms are approaching corporate entities more frequently, hoping to persuade them that some assets can be better managed by specialist private equity firms, said Don McDonough, managing director of JLL Partners, in remarks at the September 2018 Mergermarket Healthcare M&A Forum.4 “More and more, PE firms are driving these types of carve-outs,” he said, according to Forbes.

Corporate healthcare buyers increasingly find themselves competing for deals with private equity firms that are more aggressive in the bid process, said Jonathan Piques, director of corporate development and strategy for Owens & Minor, a Richmond, Va.,-based healthcare logistics and medical supplies company, in an interview with HRI. “This presents an opportunity for corporate buyers to partner with private equity, spreading the risk of the transaction and increasing the number and types of deals that corporate buyers can pursue,” he said.

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[1] Url: https://web.archive.org/web/20190331192021/https://www.pwc.com/us/en/industries/health-industries/top-health-industry-issues/pe-in-healthcare.html

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