The 21st Annual McGuireWoods Healthcare Private Equity and Finance Conference was held May 13–15, in Chicago, drawing healthcare leaders from across the industry to explore the shifting dynamics of healthcare M&A. The conference offered a front-row seat to the trends shaping 2025. Attendees shared cautious optimism, noting opportunities in a market shaped by regulatory and economic challenges.
The conference spotlighted a market at a crossroads. Conference participants highlighted regulatory challenges, including state transaction notices and reimbursement pressure, as hurdles slowing deal activity. They also noted liquidity constraints in the middle market as a persistent concern for dealmakers.
Despite the uncertainty, attendees emphasized technology’s potential, particularly AI and digital tools, to improve efficiency and patient care. Investors prioritized quality assets with strong financials and leadership, especially amid cautious lending trends. Additionally, specialty subsectors like autism services, pharmacy services and women’s health generated excitement from attendees.
The LevinPro HC team sat down with several attendees at the conference to hear their thoughts on the current healthcare M&A environment, including Scott R. Witter, Managing Partner at Breakwater Advisers; Craig Castelli, Founder and CEO of Caber Hill Advisors; Matthew Huber Managing Group Director, Healthcare Banking & Finance at Flagstar Bank; Robert Chamberlain, Senior Vice President at AlixPartners; Joice Pharris, Director at CohnReznick; and Jeff Freedman, Private Equity Engagement Director at ModMed.
In this Q&A, six industry leaders reveal the latest healthcare M&A trends, and share key insight and strategies to navigate the market successfully.
Q&A: Industry Leaders on the 2025 Healthcare M&A Market
Q: Which subsectors are generating the most M&A interest?
Scott Witter, Breakwater Advisers: “Autism services are seeing a revival at the platform level. There have been successful exits in the last 6-8 months, with more in the pipeline, which could reinvigorate the sector… We’re also seeing a resurgence in ophthalmology, eye care and retina. Veterinary also continues to perform steadily now that valuations have stabilized.”
Joice Pharris, CohnReznick: “A surprising area of buzz to me was pharmacy services—everything from pharmaceutical consulting for launching new drugs to CROs. The big transaction earlier this year, with Sycamore Partners purchasing Walgreens Boots Alliance, shows pharmacy services as a bigger driver than retail, and I’m hearing it’s a future area of growth and investment, despite being somewhat dormant.”
Matthew Huber, Flagstar Bank: “Women’s health is being whispered about, suggesting potential opportunities. I’ve heard it mentioned three times at this conference alone.”
Q: What’s an under-discussed trend in healthcare M&A for 2025?
Craig Castelli, Caber Hill Advisors: “We’re seeing a spike in pain management opportunities, which is polarizing due to reimbursement changes and stigma around opioids. Even beyond opioids, questions about medical necessity for certain procedures persist, but there’s a noticeable increase in activity this year compared to prior years.”
Joice Pharris, CohnReznick: “A topic I think is under-discussed is that digital transformation is a huge need. The healthcare industry is years behind other industries like finance and retail, still using faxes and manual processes. Acquisitions that accelerate digital transformation, improve cybersecurity or enhance efficiencies will be key.”
Q: What are the biggest challenges for M&A dealmakers in 2025?
Craig Castelli, Caber Hill Advisors: “The biggest challenge is the lack of liquidity in the middle market. Lower middle market private equity investors are hesitant to buy because they’re struggling to sell their own portfolio companies upstream. This issue, unique to practice investments, could persist for another year or three.”
Scott Witter, Breakwater Advisers: “There’s still uncertainty in the market, largely due to the regulatory environment and added reimbursement pressures around Medicaid. This is causing some hesitation among dealmakers.”
Matthew Huber, Flagstar Bank: “The challenge isn’t financing availability—there’s more capital now than a year ago. It’s buying at the right price. Paying unreasonably high multiples makes financing tough, as banks, wary of real estate portfolio risks, are conservative and avoid risky commercial loans.”
Joice Pharris, CohnReznick: “Challenges include potential global economic turbulence from wars and trade tensions, plus the regulatory environment, like certain U.S. states regulating the amount of time that is needed for the advanced notice of transaction in the physician practices space. These aren’t showstoppers but add more time and diligence to the M&A life cycle.”
Jeff Freedman, ModMed: “Despite people’s expectations on rate decreases, operational efficiency that drives higher margins is still the underlying theme, and I think that’s the message that I heard pretty loud and clear.”
Q: How does technology influence M&A strategies?
Robert Chamberlain, AlixPartners: “The cost of data production is dropping, leading to an exponential increase in data. This requires tools to process and adjudicate data effectively, as the healthcare system will look completely different in 5-10 years due to AI and tech advancements.”
Jeff Freedman, ModMed: “There’s a degree of naivete when it comes to what defines operational efficiency at a practice and what the real KPIs are that tell you that you’ve moved from inefficient to efficient. We are still early with AI value-added services in healthcare, but there’s little doubt we are moving quickly towards enhancing the patient experience and bringing new levels of workflow efficiency to physicians and staff.”
Joice Pharris, CohnReznick: “Providers are beginning to think about patients the way Amazon thinks about their customers, with enormous data to segment and classify each of us by personas. They’re behind, but it’s an excellent aspirational goal that will allow them to segment their patient population. Companies helping translate this data into usable information may win the race in this big data space.”
Matthew Huber, Flagstar Bank: “Selling hasn’t changed: founders sell when they’re ready to move on or when private equity offers to scale the business. Technology, like AI and virtual solutions, will drive growth, especially in rural areas, where small organizations can’t deliver care without tech advancements.”
Q: What defines a high-quality asset in today’s market?
Craig Castelli, Caber Hill Advisors: “A high-quality asset hits all the marks: strong profits, high margins, doctor and staff retention, consistent organic and inorganic growth, stable reimbursement environment and a leadership team that private equity firms trust to steward the business post-investment. Today, you need to check every box to secure a premium valuation, unlike a few years ago when half would suffice.”
Robert Chamberlain, AlixPartners: “A repeated theme from the opening panels was the search for quality in deal flow. There’s volume, but investors are seeking truly investable opportunities, prioritizing high-quality assets over rapid growth in today’s market.”
Q: What advice would you offer companies navigating the Healthcare M&A market?
Scott Witter, Breakwater Advisers: “A good seller prepares thoroughly, organizing their financials, researching the process and understanding valuation metrics. They go in with clear expectations and open eyes.”
Joice Pharris, CohnReznick: “Due diligence, due diligence, due diligence. Cover all areas—financial, accounting, IT and HR. Start to plan the integration process before the deal to avoid rushing, as this improves success.”
Robert Chamberlain, AlixPartners: “Quality is king. Companies need a thoughtful approach to their own quality and a clear integration roadmap for acquisitions or sales, ensuring high-quality EBITDA is generated quickly and intentionally.”
Matthew Huber, Flagstar Bank: “Banks in healthcare want to collaborate on transactions rather than compete heavily. It’s about partnering for appropriate returns, not a race to the bottom with the least structure or lowest price. Collaboration suits this specialty sector better than constant gamesmanship.”
Q: What’s the outlook for healthcare M&A in 2025?
Scott Witter, Breakwater Advisers: “I don’t expect a quick rebound this year. Things may start to loosen up by year-end, but we’re likely looking at a 12- to 24-month horizon. Still, there’s pent-up demand for higher-quality deals on all sides.”
Joice Pharris, CohnReznick: “Multiples trended downward last year, but I anticipate an uptick in the second half of 2025. As the stock market turns green and fears ease—driven by resolutions in trade wars or a clearer regulatory outlook—higher transaction volume will push multiples up.”
Matthew Huber, Flagstar Bank: “More lenders will enter the healthcare space, which is good for borrowers. Banks, including Flagstar, are shifting toward commercial lending and away from investor real estate, so borrowers should see better terms over the next year.”
