M&A Activity Goes Off the Fiscal Cliff in January
The equity markets are staging their own version of a mid-winter comeback, with the Dow dancing around the 14,000 mark for the first time in five years. That would certainly seem to presage a similar rise in health care mergers and acquisitions, but then, that would make life simple.
Last year at this time, we were crowing that health care deals in January were breaking records. Looking back, there were a total of 110 deals announced in January 2012, with a combined dollar value of nearly $12.3 billion. The year ended on a more disappointing note, however, with deal activity at a near-record level, but deal prices at a near-record low. (See Health Care M&A Monthly, January 2013.)
Flash forward to January 2013. Deal volume totaled just 74 deals, down 32.7% compared with the year-ago period. The combined dollar volume of $3.9 billion was 68.5% below last year’s level. Granted, any month that didn’t represent a new record would show declines in comparison to January 2012. And last month, four sectors that reported deal activity had no announced prices: Behavioral Health Care; Home Health & Hospice; Physician Medical Groups; and Rehabilitation. (The Managed Care sector even had no announced deals last month.)
Deal volume for the services sector was down by 14.3% compared with January 2012, coming in at 48 announced deals versus 56 a year earlier. Because so many deals did not have price, deal volume remains the best measure of interest in the sector.
Technology deals made up only 35.1% of the total 74 deals in Janaury 2013. By contrast, the technology sector accounted for 49.1% of the 110 deals recorded a year ago. But there were more prices attached to tech-side deals, as is often the case. So despite the lack of a billion-dollar deal in 2013, the sector still racked up $2.58 billion for the month.
Judging by last year’s pattern—a fast start followed by a much slower finish—you wouldn’t be crazy to think that deal volume might just be resting up for a sprint to December 31. We’ll keep you posted, either way……..Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today