M&A deal trends and PE investment in healthcare

The trend in healthcare company consolidations has been moving at a robust pace for almost a decade. The height of the COVID-19 pandemic actually fueled an increase in deal activity, so it’s instructive to examine how these trends may continue when a more normal state of business resumes.

In a recently released report from PitchBook Data Inc., both the 2022 deal count and deal value in North America took a marked decline from record highs in 2021. Nonetheless, as the 11-year data show, 2022 levels are still in line with a marked increase in M&A volume in the healthcare industry starting in 2014.

An examination of a subset of this activity, annual U.S. healthcare private equity deals, shows a similar trend, though with U.S. PE deals comprising a higher percentage of overall M&A activity by deal volume as of late.

This high-activity trend for healthcare deals should continue for the foreseeable future, based on large amounts of overall U.S. PE funds raised in the last two years. However, PitchBook notes that along with the decrease in deal volume seen in 2022 from 2021, the average time to raise funds grew from 13.8 months to 15.4 months, which may be attributable to the increase in average fund size.