Published January 2023
Coming off a record year for M&A markets in 2021, 2022 continued to see elevated activity through the first half of the year, however geopolitical uncertainty and broader macroeconomic headwinds slowed both publicly reported deal volume and deal size in Q4. While average transaction size was up YoY through the first three quarters of 2022, Q4 saw a dramatic drop for healthcare services. The uncertainty seen in leveraged finance markets drove private equity investors towards smaller roll-up opportunities that commanded lower valuations and utilized less debt financing. Deal activity in the PPM space remained strong in 2022, with continued interest seen in several subspecialities including dentistry, cardiology, and ophthalmology.
Private equity firms made 112 new platform investments in 2022, accounting for 7% of all private equity activity in the healthcare services space. Despite the cooldown seen in Q4, overall predictions of a robust M&A market for healthcare services came to fruition in 2022. Provident expects the healthcare services M&A market will regain momentum in 2023 as investors adapt to the go-forward economic conditions, even in the face of high interest rates and an uncertain macroeconomic environment. Private equity firms will likely pivot their efforts to focus on building out their existing healthcare services platforms through roll-ups, keeping deal activity strong while pushing down overall transaction values.
In this white paper, we examine key investment trends from 2022 in the healthcare services industry as well as go-forward expectations for the sector.
- Continuation of Record-Breaking Year with Q4 Softening
- 2022 Healthcare M&A Trends: Sector Highlight
- Provident 2022 Closed Transactions
- Provident Case Studies