How Private Equity Investors Can Win In The Crowded Healthcare Arena
ByThe allure of the healthcare sector for private equity investors continues to grow. Many of the sector’s dynamics—rampant fragmentation, accelerating pressure to reduce costs, new purchasing patterns and robust exit channels—make it a perfect fit for classic private equity strengths. One sign of that appeal: private equity firms nearly doubled their investments in healthcare-related assets last year to nearly $30 billion.
However, high demand leads to high valuations, a particular challenge for price-conscious private equity firms. Corporate buyers stoked this demand, boosting their M&A spending in healthcare to a record amount of nearly $380 billion in 2014. While some of the corporate megadeals were out of reach of private equity firms, corporate buyers also continued to be highly active in the $500 million to $5 billion range that is desirable to private equity. One example: Over the past decade, corporate buyers made an average of 50 acquisitions per year in that range; in 2014, they completed more than 60 deals in it…
How Private Equity Investors Can Win In The Crowded Healthcare Arena
