Healthcare M&A Still Thriving

Posted by Mark Brousseau

Despite a weakening economy, 2008 was a solid year for M&A in the pharma and healthcare information and technology industry, according to Berkery, Noyes & Co. The total volume of M&A transactions in the pharma and healthcare information and technology market for 2008 increased to 156 transactions, an increase of 16 percent over the previous year; however, the total value decreased to just below $9 billion, a decrease of 9 percent, the investment banking firm says.

The most active segment for 2008 by volume was Healthcare IT, with a total of 75 transactions, or 48 percent of the total volume. Healthcare IT has been the most active segment for the past several years and we do not expect this to change in the upcoming year.

Berkery, Noyes & Co. observed a decrease in financial acquisitions during the second half of 2008, even though overall activity in the market as a whole remained solid throughout the year.

The industry ended the year on a strong note - Q4 2008 was more active in terms of deal volume than it had been for the previous 5 years, the firm says.

A notable trend for 2008 is that while the aggregate value of the industry’s top 10 deals and the ratio of transaction value/volume decreased from previous years, Berkery, Noyes & Co. observed an increase in 2008 median enterprise value. This suggests an overall increase in buyer selectivity as well as increasing activity and interest in the middle market, the firm says.

Looking ahead, Berkery, Noyes & Co. expects to see continued deal activity in the pharma and healthcare information and technology markets. These markets are less impacted by the economic downturn and may benefit from increased interest in healthcare.