M&A trends suggest shift from 'blockbuster' to 'strategic' deals

A new report from Irving Levin Associates finds that investment in mergers and acquisitions (M&A) across the health care sector decreased by 38% from 2011 to 2012—but the number of deals announced by health companies increased 5.9%.

Dealmakers in 2012 committed $143.3 billion toward 1,063 health care M&As, the second-lowest dollar amount in the last decade. By comparison, dealmakers committed $231 billion to 1,004 deals in 2011.

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Overall, the number of mergers announced in the health technology sector—which includes medical devices, pharmaceuticals, and telehealth—increased by 2%, while investments in such mergers decreased by 41.6%.

Meanwhile, the number of mergers announced in the health care services sector increased by 8.9%, while investments in those mergers decreased by 31.5%. Specifically, the number of mergers announced for hospitals increased by 2.2%, while investments in such mergers decreased by 77.2%.

The increase in merger deals and decline in merger dollars indicates that "buyers [are] going after more strategic deals and not the blockbusters," Stephen Monroe—a partner at Levin Associates—said in a release.

The company expects health care M&A activity to remain strong through 2013 as the Affordable Care Act is further implemented (Levin Associates release, 1/21; Hartford Business Journal, 1/22).


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