Despite the ongoing pandemic, transaction activity in the healthcare space was very robust in 2021. Most healthcare businesses swiftly rebounded from the initial COVID-19-related shutdowns of 2020, with companies and their private equity sponsors quickly shifting gears from working through liquidity and covenant issues in the first half of the year to pursuing opportunities for growth starting in the second half, reports Twin Brook Capital Partners.
The healthy volume of add-on activity seen at the end of 2020 continued to build through 2021.
LBO activity also picked up, making it a busy year not only for PE sponsors and the healthcare companies they back, but also for the lenders these groups call on for financing to support transactions.
Twin Brook Capital Partners, for example, committed a record $3.5 billion to private equity sponsors in support of healthcare transactions last year, which included 28 new platform financings and 32 facility upsizing transactions across 33 healthcare subsectors.
In order to provide smooth deal execution and continued support of a sponsor’s equity thesis post-close, it is critical that lenders in the healthcare space understand key sector-specific diligence areas, including but not limited to the reimbursement and regulatory outlook, compliance risks, FDA requirements, human capital issues and state-specific structuring requirements. Read more.
