Private Equity Healthcare

Private equity healthcare investments are on the rise, and FMG can help you make the most of it.


Healthcare companies should consider selling non-core business units to private equity firms that have money to invest and may be more apt than a corporate buyer to purchase a single business unit. And as mega-deals complete, newly consolidated entities should consider shedding non-core assets, with private equity as a potential buyer.

For years private equity firms have invested in healthcare, but now the pace is quickening as they step up their presence in a highly fragmented health industry, seizing on consolidation opportunities to build a better business model. Private equity’s acquisitions and investments in the health sector have become increasingly diversified and frequent; they include such things as new entrants in technology and convenient care delivery, clinical research organizations, and ophthalmology and dermatology practices. FMG expects this trend to accelerate in 2020, giving traditional healthcare companies opportunities to sell all or portions of non-core assets and double down on their core competencies, or partner with private equity in acquisitions in which they would otherwise be competing against each other or unable to act on their own.
The healthcare industry saw a high level of deals in general in 2017, 2018 and 2019, involving both private equity and corporate buyers. As those deals are completed, many may be looking to sell non-core business units, prime targets for private equity firms looking for a proven business model and solid cash flow. Private equity’s purchases of healthcare divestitures are expected to continue in 2020 as the sector looks to invest the cash it has raised, a reported $624 billion ready for investment across industries as of July 2018.

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. More and more, PE firms are driving these types of carve-outs.

Corporate healthcare buyers increasingly find themselves competing for deals with private equity firms that are more aggressive in the bid process. 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.

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