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HealthcareCompanies in the Healthcare industry have become highly attractive acquisition candidates for various strategic and financial buyers primarily due to stricter regulations, federal funding, and in some cases, mandated use by the federal government. If you are in the Healthcare IT or services sector, it is possible you have recently been contacted by interested buyers or their brokers. We are familiar with the Healthcare IT and Services sector because we have represented and are currently representing several companies in this sector. We understand what exactly buyers are looking for and how to differentiate your company from the other companies they are also pursuing. Buyers are typically looking for Healthcare IT and Services target with the following product characteristics:
Most of the spending in this sector (75%) comes from patient care services spending from nursing homes, hospitals, and clinics. Expenditures are expected to double over the course of the next ten years, from 2.2 trillion dollars to 4.5 trillion dollars in 2016. Companies that have demonstrated that they are poised to share in this tremendous growth have easily found strategic buyers, while companies that have struggled with the shifting dynamics in this industry have been acquired by private equity groups interested in helping them navigate the shifting landscape. Recent M&A TrendsThe lower middle-market (deals under $100 million) has weathered the credit freeze and "Great Recession" better than the upper middle market has. The deal landscape for the middle market has changed as Wall Street has struggled, but so far, deals are getting done.The biggest change has been in the deals has been valuations, reliance on debt and reliance on the seller to finance part of the deal. We have seen an increased use of earn-outs, which are typically used in periods where interest rates are high or credit is tight. Thus, PE groups have not stopped investing, and in fact are aggressively trying to deploy their capital into middle-market companies. As profits are returning, many strategic buyers are more willing to use their cash reserves to purchase various technologies or intangibles that are of synergistic value to them. Depending on your situation, now could be a good time to seek an exit or even plan for an exit several years down the road. For those that want top dollar for their company and know it will achieve strong, consistent growth for many years, now is definitely not the right time to sell. While valuations may be down, there are many creative ways of structuring deals that may not affect your end proceeds much. Therefore, if you are a business owner looking to sell, do not avoid doing so due to market conditions. While current market conditions might require a more nuanced approach, the directors at Orion Capital Group have the experience to help you weather these current changes. If you would like to learn more about Orion Capital Group, please contact us by your prefered means. Any mode of communication is held strictly confidential. |
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