Healthcare private equity deals scored second-biggest year, finds new report from Bain & Company

View this email online

Healthcare private equity deals scored second-biggest year, finds new report from Bain & Company

Good morning, Hubsters. MK Flynn here with the Wire.

In New York, we’ve got a beautiful Spring day today, with the magnolia trees and forsythia bushes in full bloom.

There may be some clouds in the financial forecast, as corporate earnings season kicks off this week.

As concerns continue in the wake of Silicon Valley Bank’s failure, investors will be following closely as quarterly results come in this week from some of the country’s biggest banks, including JPMorgan Chase, Citigroup and Wells Fargo.

At PE Hub, we’ll be looking and listening to see what bank executives say about lending, and how loans for PE-backed deals may be affected.

Switching gears… A new report on healthcare dealmaking just came out this morning.

Let’s take a close look at it.

Recession-proof reputation

Healthcare dealmaking hit near-record levels in volume and value in 2022, according to a report out this morning from Bain & Company.

Total disclosed deal value reached nearly $90 billion, down from $151 billion in 2021 but still more than $10 billion more than the next-closest year, found Bain’s 12th annual Global Healthcare Private Equity and M&A.

"Healthcare private equity has earned a recession-proof reputation, typically outperforming overall private equity activity during economic downturns," said Kara Murphy, co-lead of healthcare private equity at Bain. "While the space is resilient, investors will face continued challenges ahead as interest rates and labor costs continue to climb, and credit continues to be tight.”

For details on the report, including which healthcare sectors to watch in 2023, see the premium version of today’s Wire on PE Hub.

Enterprising

Another sector we’ll be keeping a close watch on this week and throughout earnings season is tech.

Volatility in tech stocks has created opportunities for PE firms.

For example, in March, Vista Equity Partners completed its take-private buyout of Boston-based insurance software developer Duck Creek, for about $2.6 billion.

PE Hub is tracking activity in the sector closely, especially the enterprise software subsector.

Obey Martin Manayiti is working on a feature about what’s driving enterprise software deals, including the financing of PE transactions.

If you have insights to share, reach out to us at mk.flynn@peimedia.com and obey.m@peimedia.com

On that note, I’ll sign off for today, but I’ll be back with more tomorrow.

Until then, happy dealmaking,

MK

Read the full wire commentary on PE Hub ...

Also of note (may require subscriptions)

City of Fresno Retirement Systems will increase its target allocation to private equity over the next two fiscal years as it manages escalating exposure to the asset class. (Buyouts)

As part of its "Impact Investing" special report, Infrastructure Investor today looks at microgrids. While scaleability remains a concern, microgrids have a significant role in bringing power to developing countries.

Sujeet Indap writes in FT's most recent Inside Business column how a recent legal ruling in Delaware concerning Vista Equity Partners' 2018 deal for software business Mindbody "is a detailed window into how private equity firms can prey on the neuroses of chief executives for their own gain."

"Activist investors had their busiest quarter on record in the first three months of the year, emboldened by depressed share prices that have provided a fertile environment in which to find targets." (Financial Times)

"Private-equity funds went on a buying binge for food companies before markets crashed in 2022. Now they have indigestion that is contributing to rising prices at the grocery checkout." (Wall Street Journal)

"Sunday Natural, an online retailer that makes nutrition products including vitamins and food supplements, is exploring options including a possible sale, according to people familiar with the matter." (Reuters)

The Journal has an interview with Paul Singer, founder of Elliott Management: "He warned about subprime mortgages before 2008, Dodd-Frank in 2010, and inflation in 2020. After Silicon Valley Bank, what does he think is next?"