In recent years, there has been a tremendous growth in the number of physician practice transactions with private equity across multiple specialties. In fact, 2021 saw the highest number of deals in this sector, fueled in part by low interest rates, pent-up volume from the 2020 COVID backlog and a fear of change in the capital gains tax rates from a change to the Biden Administration, Medical Economics reports. Valuations during this time were at an all-time high and added more fuel to deal volume. A change in macroeconomic factors in the latter part of 2022 and into 2023 has impacted deal volume, but valuations remain strong despite these changes.
Large recapitalizations are on hold until later in the year, and consolidators are focused on integrating recent acquisitions while also pursuing organic growth initiatives to drive value creation. This internal focus benefits the consolidators operationally and financially – through business improvement, system conversion and integration, compliance and unification of processes and protocols to name a few. With stronger platforms and optimized practices, these companies will likely be more attractive to future buyers. Read more.
