The forces transforming healthcare continue to shape M&A in this sector. The consolidation of health systems and physician practices, the shift of clinical services to non-hospital settings, the move toward value-based payments, and payer and patient preferences for telehealth and healthcare at home all helped influence deal making during the second quarter. Yet not since Q2’20, which was marked by pandemic shutdowns and a sudden recession, has M&A been so restrained.
The total of 245 deals in Q2’23 was 7% below deal volume in Q2’22 and 41% short of Q2’21 levels, KPMG notes in a new report.
Ongoing pressures could keep second-half M&A near first-half levels. Additional interest-rate hikes even amid an economic downturn, political divisions in advance of a presidential election year, and uncertainty about the valuations of potential acquisition targets may combine to postpone a rebound In deal making. But KPMG expects at least some of those headwinds to moderate toward the end of the year, and that could begin to release long-pent-up demand.
As valuations continue to contract and companies look to divest non-core assets, interest from both strategic and financial buyers is likely to pick up, particularly into the first half of 2024. Read more.
