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There has been significant investment in the healthcare sector by Private Equity (PE), with more than $750 billion invested by PE in a wide range of U.S. healthcare initiatives. Peter Jennings and I are joined by Sanjay Panchal from Livingbridge, Sam Gray from Apposite Capital and Alison Price from Queen's Park Equity and discuss why there's so much interest in the healthcare sector. Tune in to the full episode to learn about the subsectors receiving the most interest from investors, the surge of tech-enablement in this space, and our guests’ respective value-creation strategies. https://lnkd.in/e44m2eHT Grant Thornton UK LLP #privateequity #healthcare #grantthornton #valuecreation #techenablement

The Peterson-Milbank Program for Sustainable Health Care Costs helps bring transparency to statewide healthcare spending and transactions. Participating states like Rhode Island set cost growth conditions on mergers and acquisitions to limit rising healthcare costs. Learn how states are taking action to prevent unsustainable cost increases from healthcare transactions in Modern Healthcare: #HealthcareCosts #DataTransparency Milbank Memorial Fund

More than a fifth of the healthcare companies that filed for bankruptcy last year were owned by private equity firms, which also have a hand in many healthcare companies teetering on the brink in 2024, a new report finds. I'm assuming that this is for the USA only, but I can imagine that the pattern is not that different in other parts of the world such as the UK. The objectives are very different for PE investors, and perhaps this accelerates the decline of healthcare companies.... discuss ���� https://lnkd.in/expZmgXp #privateequity #healthcare Candesic YFM Equity Partners Octopus Ventures FIVE ARROWS MESSIEURS DE ROTHSCHILD FRERES Founders Forum Group #businessfailure #funding #becarefulwhatyouwishfor

Last week, I had the great pleasure of participating on a panel at McDermott Will & Emery's annual Healthcare Private Equity conference (#HPEMIAMI2024) addressing the complexities of "Nailing the Exit," one of several panel discussions in the "Creating Value Through Operating Excellence" track on the first morning of the conference. Over the course of thirty fast-paced minutes, my fellow panelists Adam Elberg, Becky Levy, Jeff Jones, and Neil A. Mitchell and I, with the skilled moderation of MWE attorney Andrea shared multiple decades of combined experience from a number of different viewpoints about how to get a healthcare exit across the finish line and maximizing the value of the underlying transaction. Some of the key takeaways from the panel were: 👉 It is never too early to start preparing for the exit, but the focus should be on creating a solid and sustainable healthcare business independent of the exit strategy. 👉 Scalability and the sustainability of growth post-exit are key factors many healthcare company acquirers are looking at when evaluating potential acquisitions, second only to EBITDA. 👉 Being unprepared for diligence, compliance issues, and challenges to go-forward economics can stop a promising exit discussion in its tracks and deter potential buyers. If you are a healthcare company seeking capital or pursuing an exit, a healthcare investor, or a healthcare M&A advisor and you did not attend the 2024 Healthcare Private Equity Miami conference, please consider doing so next year. The content, the contacts, and the overall experience are well worth the time and the cost to attend.

Traditional private equity doesn't belong in healthcare. A recent systemic review (link in the comments) confirmed this--private equity "ownership is often associated with harmful impacts on costs to patients or payers and mixed to harmful impacts on quality." "No consistently beneficial impacts of PE ownership were identified." Private equity firms used to be referred to as leveraged buyout investment firms. But they had to rebrand to private equity because of the terrible things they were doing to the companies they bought. It became too difficult to buy a company if the company knew it was a leverage buyout firm purchasing them. The goal of traditional private equity is not to create a sustainable, long-term business (though it could be and there are a few PE firms doing this). It's to buy a cash-flowing business by using tons of leverage (debt) and put that debt onto the new company they bought--none of the debt stays with the individuals. Then extract as much wealth as they can over the next ~7 years by increasing the cash flow + valuation of the company by cutting employees...oversight...corners. Plus a little (or a lot of) financial engineering. Exactly how I like my #healthcare... Private equity keeps the extracted wealth, leaving the purchased company a husk of debt and unsustainable processes. Then pass it on to the next #privateequity firm, or file for bankruptcy (now that they extracted the wealth from it anyways). Healthcare is not a 7-year revenue maximization scheme. This kind of private equity doesn't belong in healthcare. #investment #financialengineering #privateequityfirms

As we near the end of the third quarter of 2023 and look ahead to 2024, our attorneys shared their perspectives on issues and trends in the #healthcare private equity market. Read more: https://bit.ly/HCPE-Q32023   #HealthcarePE #PrivateEquity   Authors: Lymari Cromwell, Katie Day, Margaret Dodson, Angela Humphreys, Britt Latham, Brittany Garcia (McCants), Tatjana Paterno, Sehrish Siddiqui, Katherine Smalley and Ryan Thomas

WSJ: Private Equity Puts Brakes on Healthcare Roll-Ups After Government Scrutiny “Britton Costa, head of healthcare and pharma at credit-analysis company Fitch Ratings, says the government crackdown on private-equity roll-ups in the healthcare sector could be a short-term positive for credit quality. Roll-ups often use high leverage levels, and government scrutiny could force firms to moderate their use of debt. Costa doesn’t see a “dramatic slowdown” in healthcare roll-ups yet but said it could happen if regulators start winning more court challenges to mergers. He notes that the FTC has had a mixed record in these cases so far, with several attempts to block deals on antitrust grounds tossed out by judges.” https://lnkd.in/e7pRREMj

Private Equity in Healthcare has been a hot topic for the last few years. (Maybe not "hot enough" in my opinion...it's become dizzying to keep up with the ownership structures across almost every part of the industry today). Some interesting insights in this article regarding the slowing number of private equity deals in the market since 2023, how these deals have impacted cost & quality of care - and where PE firms may be looking next to find the next "niche". https://lnkd.in/gbZJ2Zcn

HUB International’s financial sponsors team recently attended McGuireWoods LLP's Healthcare Private Equity Conference in Chicago. HUB proudly served as a sponsor for the event, which brought together nearly 1,000 investment professionals and senior executives from across the industry’s many sub segments. Read more about our team's key takeaways below and to discuss HUB's healthcare M&A, capital markets and GP-led secondary insurance experience, please contact us. #TeamHUB #healthcare #privateequity #MnA #capitalmarkets Liz Yarger Marc Mingolelli Blake Wiedman Michelle Lewis Luis Rafael Gazitua Liam Brown Peter Reilly Anthony DellaCroce Danny Gemma John Marshall Jordan Parnell

Top quotes from my conversation with Chris G. from Bain Capital. 1. "In early 2005, the deal started off with a phone call saying “hey, I’ve got a crazy idea,” because the transaction was so large that no one thought it was plausible." 2. "HCA was on the very front edge of take-privates in the mid-2000s, and helped kick off what became a much more active wave of take-privates after that." 3. "We weren't sure that in 2006 you could really do a $33 billion enterprise value deal as big as HCA. It was the largest transaction at the time and by far the largest that had happened since the first big wave of LBOs in the late 80s." 4. "Today there are large pools of co-invest capital that didn’t exist in 2006. The way large transactions would happen would be in consortiums amongst multiple GPs."   5. "One of the hardest dynamics in take privates is when you have an unsophisticated board. They just don't know what they need to be worried about."   6. "The sign of a good negotiation is when everybody feels nervous with the outcome in a balanced way." 7. "Success in business is not always some grand transformation. In this case it was about doing a lot of little things better over a long period of time." 8. "Given the size of the platform, the base case from the very beginning was this is very likely going to need to be an IPO again. We didn't really see any strategic buyer wanting to enter the hospital space in that large of a way."   9. "Bain Capital IPOs outperform the overall market index dramatically. That’s not happening because we’re altruistic. The only way we can exit is by taking companies public that have value creation runway in them that public market investors can get excited about." 10. "The deal proved that you could do a very large debt underwriting and put together an equity consortium big enough to support such a large transaction. Then, the GFC happened a few years later and turned a lot of those things on their heads. The industry has unlearned and relearned those lessons since then." With thanks to Janus Henderson Investors.