Health Care M&A Activity in Q1 2014 Softens Compared with Q4 2013, According to The Health Care M&A Report
NORWALK, CT – April 22, 2014 – Health care merger and acquisition activity was a little soft in the first quarter of 2014. Deal volume was down 14% versus the previous quarter, with 239 deals announced. However, the most recent quarter bested the same quarter a year ago, by nearly 13%, when only 212 deals were announced, according to The Health Care M&A Report. Deal value actually improved compared with Q4:13. The early total for M&A activity in the first quarter is $49.6 billion, up 11% compared with Q4:13. Compared with the first quarter of 2013, when buyers committed just $15.6 billion, deal value jumped 217%.
Source: The Health Care M&A Report, April 2014
Deal making in the Services sector was down 8.1%, at 136 deals, compared with the previous quarter, but was slightly better than the year-ago first quarter, which had 131 deals. Measured by total dollar volume, the Services side had a combined total of $12.4 billion in Q1:14, down 28% compared with Q4:13 ($17.3 billion) but 120% higher than the $5.6 billion total in Q1:13 (just $5.6 billion).
The Technology sector saw weakened deal activity compared with the fourth quarter of 2013, down nearly 21% at just 103 deals. Even that slower performance was better than the year-ago quarter by 27.2%, which had only 81 deals. Spending was another story, with $37.2 billion committed, up 36% versus Q4:13 ($27.4 billion) and 272% better than the first quarter a year earlier (just $10 billion).
Some trends that took shape in 2013 were still playing out on the Technology side. In 2013, the Pharmaceuticals sector did not see any mega-billion-dollar deals, but activity stayed strong. The equity markets were rewarding acquirers despite ever-rising valuations for generic drug makers and specialty pharmaceutical companies. Activity cooled a bit in the first quarter, as acquirers took stock and potential sellers began preparing books for the coming quarters. Similarly, the Biotechnology category enjoyed a busy Q1:14, only slightly behind its performance in Q4:13 (26 and 30 deals, respectively), but more than double the number of deals in the year ago quarter. However, the IPO market is not as hot for biotechnology companies so far this year, and that sentiment may spill over into the M&A side.
“Health care merger and acquisition activity has recovered from the lull it saw in the first quarter of 2013. The equity markets are performing even stronger than last year, and the implementation of the Affordable Care Act didn’t slow deal-making in some sectors,” said Lisa E. Phillips, editor of The Health Care M&A Report. “With that uncertainty gone, we expect to see a couple of busy quarters ahead.”
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