Global Healthcare Private Equity and Corporate M&A Report 2017
(from Bain & Co.)
Turmoil creates opportunity, and in 2016, there was plenty of both.
Private equity investors contended with a world of uncertainty. Would the long-running global recovery gain strength, falter or muddle along? Would the UK vote to exit the EU? Who would win the US presidential election?
Amid all this volatility, investors latched onto healthcare as a safe haven—that is, an industry with proven resilience to economic turbulence. The growth of healthcare is powered by several immutable long-term trends: an aging global population, a rising incidence of chronic diseases, an expanding demand for quality services and an ongoing need to deliver those services more efficiently.
Impelled by this logic and helped by low interest rates and readily available capital, funds pushed the total disclosed deal value for healthcare private equity to $36.4 billion in 2016, the highest level since 2007. It was a banner year in spite of a welter of questions surrounding the industry—especially in the US, the world’s largest healthcare market. What would happen to the Affordable Care Act, and what would that mean for insurance reimbursement rates? Would two pending megamergers between US health insurers be blocked by the courts? Would pharmaceutical prices come under greater pressure? In this kind of environment, could the sky-high valuations for deal targets that had prevailed during the past few years be sustained? Would multiples continue to expand?
(continue reading on Bain & Co.)