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Health care deal outlook for 2019 good, despite slow start to year–panel

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Health care deals are down to start 2019, but the outlook is good, largely due to of the amount of dry powder on the sidelines, a recent panel of private equity professionals noted earlier this month.

The panel discussion, entitled “Financing the Deal,” was hosted by The Nashville Health Care Council, and featured representatives from four private equity firms specializing in health care. It was moderated by Tom Wylly, senior partner with Brentwood Capital Advisors, which focuses on transactions in the health care technology space.

The pending 2020 presidential election is likely to be another catalyst for deal activity, panelists said, noting that many sellers may be driven to the market prior to the election, which will likely portend a period of uncertainty.

In the first quarter of 2019, private equity firms raised more than $40 billion in fresh capital; meanwhile more than $1 trillion is available to invest. So called tuck-in acquisitions dominated the first quarter, representing 72 percent of the deals, rather than platform acquisitions. The reason, according to the panel, was the high valuations being demanded by sellers who have proven their ability to integrate platform acquisitions to drive growth.

The pending 2020 presidential election is likely to be another catalyst for deal activity, panelists said, noting that many sellers may be driven to the market prior to the election, which will likely portend a period of uncertainty. The panel expected that the deal environment in 2020 would be relatively quiet.

Read more about the health care sector at RSMUS.com.

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About Rick Kes

@HealthCare_CPA

Rick has over a decade of experience providing audit and consultative services predominately to organizations in the health care industry. He has served a wide variety services for organizations ranging from large organizations with more than $12 billion in annual revenue to small, standalone entities with less than $1 million in annual revenue. Rick has served clients across the health care continuum including integrated health systems, physician groups, safety-net hospitals, health insurance clients, and other various health care related entities. Rick has experience in governmental, not for profit, and statutory accounting standards.

Rick has played a role on several due diligence engagements as a dedicated health care professional resource. In 2018, he was selected as a senior analyst in RSM’s cutting edge Industry Eminence Program, which positions its senior analysts to understand, forecast and communicate economic, business and technology trends shaping the industries RSM serves. These senior analysts advise clients on conditions impacting middle market leaders.