Q2-2023 M&A Activity & Investor Appetite Remains Strong in Middle Market
Healthcare services remains one of the top industries for investors and strategic consolidators alike proven by the significant amount of capital invested into the sector. However, the macroeconomic headwinds created primarily by the collapse of SVB, interest rate hikes, and labor market challenges led to a softer quarter for transactions compared to the first three months of the year. Despite these factors, OneOncology’s (“OO”) recapitalization by TPG Capital and AmerisourceBergen at an aggregate transaction value of $2.1 billion provides evidence that upper middle market PE groups continue to seek out assets in the healthcare services space. Following a successful hold period since 2018, General Atlantic exits its majority position in OO. The transaction comes right on the heels of Kohlberg & Company’s recapitalization of United Digestive in the previous quarter, indicating that physician services remains a sought after market.
Although transaction volume cooled in the second quarter, capital raised remained healthy and represented the second strongest quarter over the past five quarters. As a result of the continued demand for provider services, a return to a more stable macroeconomic environment, and dry powder, Provident remains optimistic that transaction activity in the healthcare services industry will return to a more normalized level in the latter half of 2023 and into 2024.
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