NEW YORK, Jan. 28, 2014 /PRNewswire/ -- Berkery Noyes, an independent mid-market investment bank, today released its full year 2013 mergers and acquisitions trend report for the Healthcare/Pharma Information and Technology Industry.
The report analyzes merger and acquisition activity for the industry during 2013 and compares it with data covering 2011 and 2012. This market includes information and technology companies servicing the pharmaceutical, healthcare payer, and healthcare provider spaces.
Total transaction volume decreased 16 percent on a yearly basis. However, when compared to 2011, volume saw a three percent uptick. Aggregate deal value rose two percent throughout the last 12 months, from $11.63 billion in 2012 to $11.81 billion in 2013. BC Partners' acquisition of Springer Science & Business Media for $4.42 billion accounted for more than one-third of the industry's aggregate value over the past year. In terms of valuations, the median revenue multiple moved slightly from 2.3x to 2.5x, while the median EBITDA multiple improved from 9.9x to 10.7x.
Healthcare IT as a percentage of the industry's total deal volume stayed the same at almost 40 percent. As for deal activity in the space, Constellation Software was the segment's most active acquirer with five transactions in 2013. Meanwhile, the largest Healthcare IT transaction was Experian's acquisition of Passport Health Communications for $850 million, which occurred in the revenue cycle management subsector. Regarding other markets covered in the report, the segment with the largest year-to-year rise in volume was Pharma IT. The number of deals in the Pharma IT segment increased 45 percent, from 22 to 32 transactions.
Despite the overall industry's downward movement in volume during 2013, the outlook for M&A remains positive. "Many healthcare IT companies are experiencing operating momentum as the industry adopts technologies at unprecedented rates," said Jonathan Krieger, Managing Director at Berkery Noyes. "Software is becoming increasingly necessary to achieve operating efficiencies when dealing with a $3 trillion complex, rapidly evolving landscape with respect to regulatory requirements (ICD-10, MU2), new payment and delivery models (P4P and ACOs), and declining reimbursement rates." Krieger continued, "Private, middle-market, tech-enabled companies are at the forefront of developing these emerging, niche technologies and are in high demand by strategic and financial acquirers."
"In today's hyper competitive HIT marketplace, companies with good scale, recurring revenue and high growth rates, whether they are revenue cycle management, point-of-care information solutions, or one of many other attractive niches, are receiving high interest from both private equity and strategic buyers," added Tom O'Connor, Managing Director at Berkery Noyes. "Strategic buyers in particular are seeking to jumpstart anemic revenue growth by acquiring fast growing, recurring revenue niche solution providers. They are also determined to accelerate their own growth by making acquisitions in order to provider fuller product suites, which they can up-sell and cross-sell to their client base."
According to Jeffrey Smith, Managing Director at Berkery Noyes, mobile healthcare is starting to play a more significant role in the marketplace, which is drawing the attention of acquirers. "The technological advancements in mobile healthcare are fostering conditions favorable to increased patient engagement and adherence," stated Smith. "For instance, new diagnostic tools that allow for easier interaction with physicians can help with wellness and preventive health." Smith continued, "Medical professionals who use mobile technology to collect data from their patients and improve point of care documentation efforts are also benefitting."
A copy of the HEALTHCARE/PHARMA INFORMATION AND TECHNOLOGY INDUSTRY M&A REPORT FOR FULL YEAR 2013 is available at the Berkery Noyes website.
About Berkery Noyes
Berkery Noyes is an independent investment banking advisory firm servicing the information industry. The firm specializes in mergers and acquisitions advisory, debt and equity financing, and financial consulting services for companies in the $10 million to $500 million range. Since its founding by Joseph W. Berkery in 1983, Berkery Noyes has worked with corporate clients to grow through acquisition, divest non-core assets, and maximize shareholder returns through strategic transactions and restructurings. For private owners, Berkery Noyes helps create liquidity and execute timely exit strategies that achieve their personal and professional objectives. The firm's research teams publish acquisition activity in the respective sectors they follow on MandAsoft.com.
Securities services are offered through Berkery Noyes Securities, LLC. For more information, visit www.berkerynoyes.com.
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