Q3-2022 Market Update: Healthcare Services M&A Market Activity Levels Remain Consistent
Healthcare services deal volumes have normalized to sustainable levels following a record-breaking year in 2021. Overall deal count for healthcare services transactions saw an 11% decrease from the previous quarter while capital invested increased by nearly 76%, demonstrating continued investor appetite. Interest in premium healthcare assets is expected to persist, with investors looking to more defensive industries as the macroeconomic environment continues to fluctuate.
While elevated interest rates and persistent inflation have been weighing on the minds of investors, they haven’t proven to be a deterrent for M&A activity within the healthcare space, especially in the lower to middle market. Deal volume, transaction size, and valuations have remained strong through 2022 as private equity firms and strategic acquirers compete for platform investments and add-on acquisitions that will bolster their market presence. The exits from successful healthcare services platforms such as EyeSouth, GI Alliance, and Paradigm Oral Health reinforce these trends and suggest that the macroeconomic situation will not serve as a deterrent in the coming months.
With deal activity remaining steady since normalizing in Q1, Provident anticipates healthcare transaction volume will continue at a consistent rate through the remainder of 2022 as investors have shown their resilience in the face of an overall weakened market environment.
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