Top Players in Lower Middle Market Healthcare PE, M&A

Alex Karlsen

The 2020’s promise to be a decade with a significant level of continued M&A activity in the healthcare industry.

The economic drivers all point to an opportunity for positive returns that are hard to match in another industry sector.  And the lower middle market is paying attention.  Macro factors that are driving this trend include:

In a recent article, Axial consolidated the top 25 lower middle market healthcare financial buyers as well as the top 25 participants on the sell-side.  Their "periodic table of healthcare" brought together the groups that are most active on either side of the table in one of the hottest sectors for activity.  (Go here to view the table and read the entire article.)

At CAPTARGET, we have also seen a significant focus from groups on both sides that we work with as well.  In fact, of the groups listed, we've worked in partnership with over 30% of them.

The opportunity in sub-sectors of the healthcare industry exist in part because there continues to be fragmentation in the marketplace, where owners of smaller medical practices (including dental practices, DSO's, and behavioral therapy practices) have not yet been exposed to inquiries from sophisticated capital or bankers who might take them through a process.

Both identifying and messaging to the owners of these practices can be a challenge for you if you do not have a dedicated "BD" staff or marketing team.  It's perhaps why so many of these top dealmakers in the healthcare space have already partnered with us, to manage that process and open up conversations for them in "hard to find" places.

With estimates that only a small percentage of these sub-markets have been consolidated, and the larger economic indicators pointing at continued arbitrage opportunities to purchase at EBITDA multiples that can drive returns for buyers, we expect to see continued growth in the number of campaigns that look to open up conversations with practice owners who may just now be looking to plan their exit.

Whether you sit on the buy side or sell side, are you looking at this space?

Review our Deal Origination services or Advisory Support services.

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