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.

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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

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