As Home Medical Equipment Attracts Private Equity, M&A Outlook Improves
While the mergers and acquisitions market for home care equipment has seen a very slow incline from its bottom in 2008, there are some strong indicators for growth in the coming years, according to a 2012 braffMarket Watch report from the Braff Group, a health care M&A company.
Simply looking at transaction volume over the past five years, the Braff Group finds, the market would appear to have reached a “new normal” at around 50 deals per year in the home care equipment market. Taking a closer look at the data and the presence of private equity in the deals, however, a different picture becomes clear.
“Viewing the data this way, we can see that after dipping in 2004 and 2005, we are in the midst of a six year run during which private equity is increasingly exerting its influence on HME M&A activity, as measured by the percentage of deals completed by these investors,” the report states.
Looking at specific market segments, interest in sleep equipment seems to be fleeting, but activity awaits in mobility, rehab and supplies. Specifically, sub-segments including diabetics, incontinents, CPAP supplies, etc. are particularly well positions for a sustained period of heightened M&A activity, Braff writes.”
“For the first time in many years, there is good reason to be optimistic about the go-forward M&A opportunities for a broad cross section of home medical equipment providers,” the report writes. “While not as robust – or predictable – as it was pre-2006, there are enough buyers in the market committed to a future that appears a tad more clear, to move pricing from what we euphemistically called “opportunistic” to a level far closer to what the risk-return fundamentals of the sector warrant.”
Written by Elizabeth Ecker