In the July 2007
issue:
A “Perfect Storm” In Private Equity-
Points To Bull Market In M&A For The Medium Term
The confluence of several factors is creating
a perfect storm for private equity deals and dealmakers in the middle
market.
Read the issue to see what these drivers are and how private equity is
affecting the growth of the health care M&A market.
...
Second Quarter
2007 M&A Results
231 Deals Announced in Q2:07 Worth $59.1 Billion
The second quarter saw the announcement of 231 deals in the health care
industry worth a total of $59.1 billion.
Current indications are that 2007 will break all prior records in terms of
the dollars spent on health care mergers and acquisitions.
...
In the Departments
Services
-Health Care Services
-Deal Summaries
-Additional Transactions
-Transaction Updates
Technology
-Health Care
Technology
-Deal Summaries
-Additional
Transactions
-Transaction Updates
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Articles Archive
Companies Mentioned in this issue:
July 2007
3M Company p10
A
AdCare Health Systems p4
AHMC Healthcare p7
Alantos Pharmaceuticals p10
Alta Healthcare System p4
American Oriental Bioengineering p16
Amgen p10
AstraZeneca p16
ATS Medical p15
B
Beech Street Corporation p9
Bellflower Dental p9
Benchmark Medical p9
Berkshire Partners p2
Bertrand Breast and Osteoporosis Center p7
BioLucent p14
Biomet p15
Boston Scientific Corp. p14
Bristol-Myers Ltd. p16
Bristol-Myers Squibb p16
BUPA p7
C
Capital Resource Partners p7
Carolinas HealthCare System p9
Cathedral Healthcare System p7
Catholic Health East p7
Catholic Healthcare West p7
Celsion Corp. p14
Central New Medical Center p7
Changchun Xinan Pharmaceutical Group Co. Ltd. p16
Chem Rx p9
Chemizon p10
Cholestech Corp. p14
Cinven p7
Cleveland Clinic p7
Cogdell Spencer p4
Coley Pharmaceutical Group p10
Columbus Hospital p7
Community Health Systems p4
CompBenefits p8
Concentra Health Services p9
Covidien p15
Covington & Associates p14
Covington Investments p8
Crouse Hospital p7
CryoCath Technologies p15
D
Deaconess Medical Center p4
Deupree Health Care Center p8
Digene Corp. p10
E
Emeritus Assisted Living p8
Empire Health Services p4
Episcopal Retirement Home p8
Erie County Medical Center p4
F
Family Homes Services p4
G
Goldman, Sachs & Co. p10
Goldman Sachs Capital Partners p15
Grandix Pharmaceuticals p16
H
Harris Williams & Co. p1
Healia p14
Health Management Associates p4
HealthTronics Surgical Services p8
Hemet Valley Medical Center p4
Hologic p14
Holy Cross Hospital p4
Humana p8
I
Illinois Health Facilities Planning Board p7
Ilypsa p10
Institutional Shareholder Services p15
Inverness Medical Innovations p14
J
JP Morgan p10
K
Kaiser Permanente p4
Kaleida Health p4
Kohlberg Kravis Roberts & Co. p15
L
Lee Regional Medical Center p4
Liberty Dialysis p7
Lion Corporation p16
M
Manor Care p8
Marcus & Millichap p8
Marwit Capital p7
Masterplan p2
MedImmune p16
Medisystems Corp. p14
MedStar Health p4
Menifee Valley Medical Center p4
Mentor Corporation p15
Meredith Corporation p14
Merrill Lynch p8
Mid Carolina Cardiology p9
Millennium Partners LP p8
Montgomery General Hospital p4
Moreno Valley Community Hospital p4
Morgan Stanley p15
Mountain View Regional Medical Center p4
N
NimbleGen Systems p10
North Hawaii Community Hospital p7
NxStage Medical p14
O
Optomagic p10
P
Paramount Acquisition Corp. p9
Pediatric Services of America p4
Perouse Plastie SAS p15
Pfizer p16
Physiology Associates p9
PNC Financial Services Group p2
ppoNEXT p9
Presbyterian Healthcare p9
Presbyterian Medical Group p9
PricewaterhouseCoopers p16
Prime Healthcare Services p4
Prime Medical Services p8
Prospect Medical Holdings p4
Q
QIAGEN p10
R
RA Capital p4
Remon Medical Technologies p14
Renovo p15
Respirics p15
Roche Diagnostics p16
Roche Holding AG p10
S
San Gabriel Medical Center p7
Sanger Clinic p9
sanofi-aventis p16
Savvian Advisers p14
Sheikh Khalifa Medical City p7
Shire plc p15
Solis Women’s Health p7
SSM Health Care p7
St. Francis Hospital and Health Center p7
St. James Hospital p7
St. Michael’s Medical Center p7
Strides Arcolab Ltd. p16
Stryker Corp. p9
Summerville Senior Living p8
Sunrise Senior Living p8
T
Taihan Electric Wire p10
The Blackstone Group p1
The Care Group of Texas p4
The Carlyle Group p8
The Edminston Group p14
Toyama Chemical p15
Tyco Healthcare p15
Tyco International p15
U
Union Dental Holdings p9
V
Valley Health System p4
Valley Medical Center p4
Ventana Medical Systems p16
VistaCare p4
W
Water Street Capital p9
Wellmont Health System p4
Wind Point Partners p9
Women’s Diagnostic of Texas p8
|
A “Perfect Storm” In Private Equity-
Points To Bull Market In M&A For The Medium Term
Email Editor
With The Blackstone Group’s (NYSE: BX) recent $4.75
billion IPO, and with U.K. regulatory bodies grilling PE bigwigs about
asset stripping, tax evasion and job slashing, private equity has figured
prominently in news reports and editorials during the past month. To
readers of this column, the growing clout of private equity in the health
care M&A market will come as no surprise, as a reservoir of pent-up
capital seeks investment. We recently attended Harris Williams & Co.’s
Second Annual M&A Outlook Roundtable in New York City to hear what
they had to say about the opportunities that private equity is currently
finding in the middle market (deals from $50.0 million to $500.0 million),
a scenario they summed up in the phrase, "a perfect storm."
Their figures present a picture of robust middle market
M&A: for example, from 2005 to 2006, activity increased by 15%. This
perfect storm, as they characterize it, has several drivers: economic
growth and strong corporate earnings; liquid and active debt markets;
significant private equity and hedge fund capital raised; increased
aggressiveness of strategic buyers; strong target company performance; and
increased crossborder activity. Low interest rates, for example, have
encouraged bankers and advisers to bring willing buyers and sellers
together for some mutually beneficial dealmaking. Chris Williams, one of
the founders of HW&Co., observed that there is currently "$180.0 billion
in private equity that has to be spent," and that "private equity is an
excellent asset class for return on equity." Low default rates, he added,
have translated into bankers’ increased willingness to lend. Besides
health care, HW&Co. looked at the building industry; transportation and
logistics; and technology.
Turner Bredrup discussed Harris Williams’ involvement in
three areas of health care: ancillary services and outsourcing; medical
and life science products; and facilities and alternate site care. These
three areas line up on a scale from health care "light" (or perhaps "lite")
to health care "heavy." Health care light , such as outsourcing, is one
step removed from the patient, is not in the direct line of fire of
reimbursement and has less regulatory oversight. As a result, it can take
retail models more easily than can health care heavy areas, such as
alternate site care. Health care light consequently attracts a greater
range of buyers, financial and strategic, while health care heavy is
restricted to a smaller universe of buyers, generally strategic with some
PEGs. Companies in all three areas benefit from a positive demographic
outlook, enjoy a superior cost position, generate positive cash flow, have
a low degree of technological risk and operate in fragmented markets with
substantial M&A activity, allowing investors scope to make investments and
to cash in on them. In an indication of how this market is buoying
valuations, earlier this year HW&Co. negotiated the sale of Masterplan,
a health care light company, to Berkshire Partners for 15x EBITDA.
Asked to gaze into the future, members of the panel opined
that an optimistic scenario of the M&A market would see the current bull
market last another four to five years. Further, because of all the
capital available, the correction, when it comes, will likely be a short
one, lasting no more than 18 months. It will involve a shake-out of weaker
companies and undisciplined bankers (witness the subprime mortgage
market), which in Darwinian and competitive terms need not be such a bad
thing.
Harris Williams & Co., a member of The PNC Financial Services Group
(NYSE: PNC), is an M&A advisory firm focused exclusively on the middle
market (www.harriswilliams.com). |
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