If you’re the owner or an investor in small- to mid-market healthcare services company, you’re probably wondering if the time is right to sell or seek growth equity from a private equity firm.
We’re hosting a webinar on just that theme, “The Ins and Outs of Selling Your Healthcare Services Company to a Private Equity Firm,” on Thursday, March 8, at 1:00 pm ET. Follow the link to register, and read on for a look at the state of global and domestic private equity markets.
Bain Capital just released its 2018 Global Private Equity Report, which painted a fairly rosy picture. Both buyouts and exits posted healthy gains in 2017, and the largest buyout funds ever seen were raised in the United States, Europe and Asia.
That said, PE firms are still facing a difficult environment for finding and winning deals. Heavy competition for assets and record-high deal multiples are making it hard to find new targets and to close transactions at prices that are attractive to these firms. That’s been a factor in the somewhat lower deal volume for the past few years.
In the United States, PitchBook reported an 11% decline year-over-year in exit volume in 2017, as both exit value and volume fell below the five-year average.
PE deal activity across the United States was roughly on par with 2016.
The two biggest concerns in the U.S. market are the high prices for assets and lack of quality targets, just as Bain Capital reported for the global PE market.
Acquisition multiples around the world remained elevated, Bain reported, and PitchBook echoed that. In the United States, the company reported that the median Enterprise Value/EBITDA multiple was 10.5x.
That’s equal to median acquisition multiples in 2016, but more leverage is being used in current deals. In 2017, PitchBook said the median percentage of debt in overall M&A went from 50% to 54.3%, which is in line with the 10-year average debt percentage of 55%.
Finally, U.S. PE firms are dealing with aging inventory of companies they acquired five years ago. Both Bain Capital and PitchBook noted there was a serious build-up of aging inventory following the financial crisis. That trend peaked in 2013, and resulted in a boom in exit activity in 2014 and 2015.
Join us as I discuss what this means for healthcare services companies with our distinguished panel. We’ll take your questions, too!