"I've known the principals of Dunn Rush & Co. for a number of years and have had the opportunity to work with them in many different capacities. They're true professionals, with deep experience in a wide range of transactions, across several industries. They are good people, and I have always enjoyed working with them. You can trust them to provide top-quality advice no matter what your situation or circumstances."
"Kevin and Greg helped me work through a very complicated series of simultaneous acquisition opportunities. They lined up and negotiated the necessary equity and debt financings, and worked through all the issues to get the best deal closed in tough market conditions. They gave me great advice throughout the process and did whatever it took to help me get it done."
Healthcare & Life Sciences
- Medical Devices
- Services
- Biotechnology
- Pharmaceuticals
The Healthcare and Life Sciences market will continue to experience strong investment interest and merger and acquisition activity as the participants absorb new industry dynamics precipitated by favorable demographics and the specifics of healthcare reform. Underlying trends and drivers include:
- Demographic trends driven by increasing access to healthcare worldwide and longer life spans.
- Continuing advances in medical technology and therapeutic treatments.
- The expansion of access to healthcare afforded by government-mandated healthcare coverage.
- The implementation of electronic medical records and continuing information technology innovation.
- The enactment of new regulations encouraging biosimulars and increased use of generics.
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Trends favoring higher personal involvement in healthcare decision making.
The Healthcare environment will continue to be very fluid and active over the near term, as the ongoing reaction to healthcare reform continues to create some uncertainty and drive consolidation in what still is a highly-fragmented industry. New technology development in areas of high therapeutic need will continue to attract funding and access to a larger insured population should prove to be a positive for the industry over the long term.
Throughout 2008 the number of healthcare deals remained very active and fairly constant. Like most other sectors, the number of deals fell precipitously in the first two quarters of 2009 due to the turmoil in the capital markets and softness in the economy. However, a few large transactions, primarily in the pharmaceutical sector, drove higher levels of aggregate deal value during the downturn. Capital raising in the sector was significantly slower in 2009 relative to 2008, but the volume of M&A activity has picked up steadily over the past nine quarters and into 2012.
In terms of valuations, quarterly average enterprise value / revenue multiples have ranged from 1.1x to 2.3x since the beginning of 2008, while the average revenue multiple in the sector for Q4 2011 hit that peak at 2.3x. Average enterprise value / EBITDA (earnings before interest, taxes, depreciation and amortization) multiples for this same period ranged from 4.9x to 12.5x, and the average EBITDA multiple in the sector for the most recent quarter was 7.9x. Recent transactions have tended to favor more mature companies with either established markets and accelerating revenues or with products demonstrating proven efficacy.
We anticipate that the uncertainty around the future direction of healthcare reform may be a drag on transaction volumes in the sector, offset to some degree by improvements in economic conditions. We do believe capital raising and merger and acquisition activity will continue to increase throughout 2012.