NANCE Healthcare dealmaking will heat up in 2023 VPT year $$"Healthcare dealmaking will heat up in 2023 with plenty of corporate cash, PE 'dry powder'" Increasing transaction volumes and players embracing value-based care—coupled with large levels of corporate cash and private equity "dry powder"—are leading to continued expansion for deal volumes in 2023, according to a new analysis from PwC. (Dilok Klaisataporn/GettyImages) https://www.fiercehealthcare.com/finance/expect-busy-year-healthcare-dealmaking-plenty-corporate-cash-pe-dry-powder Economic headwinds and recessionary fears will not slow down healthcare dealmaking next year coming off a robust M&A market in 2022.
Increasing transaction volumes and players embracing value-based care—coupled with large levels of corporate cash and private equity "dry powder"—are leading to continued expansion for deal volumes in 2023, according to a new analysis from PwC.
The accounting and consulting firm forecasts a strong outlook for health services M&A deals in 2023 with companies actively exploring M&A, divestitures and other transactions, said Nick Donkar, PwC’s U.S. health services deals leader.
"The deal market in 2022 was fairly robust coming off an unprecedented banner year, which was 2021. Obviously, 2021 was the highest deal volume we've experienced from a health services perspective. We're happy to see the health of the overall market, no pun intended, with respect to the level of volume and activity that has been exhibited thus far in 2022," he said in an interview.
He added, "The fact that we've got a lot of assets trading in this marketplace is good for all parties. As people reevaluate their strategies, they want to participate in a healthy ecosystem. The deal volume in this sector was fairly heavy and continues to be so, which speaks to the overall attractiveness of the market for healthcare."
In 2021, there were 1,996 health services M&A deals at a value of $217 billion, which marked a high for the sector.
Despite the economic downturn, the healthcare sector and health services in particular has proven to be nearly "recession-proof," Donkar noted, due to "innovation, technology and investment dollars that continue to funnel in to enhance patient care."
While sufficient headwinds existed in the deal markets to potentially stall health services deal activity in 2022, the sector performed well and is poised to further expand volume in 2023 between reshaping portfolios, divestitures and a flurry of PE "dry powder," according to Donkar.
Megadeals, trading multiples and overall deal values in the sector have not been immune to interest rate hikes and fears of an economic downturn.