SDR Provides Insight into Two Hot M&A Sectors

Axial Healthcare Whitepaper Takes You Beyond the “Mega Deals,” while Business Services Whitepaper Explores Active and Emerging Sectors Likely to Drive Future M&A Activity

In a detailed whitepaper recently released by Axial, author Karen Sibayan cites data from SDR Ventures showing 2015 Healthcare M&A deal volume on pace with 2014, and invested capital set to triple the amount invested last year.

Healthcare M&AAs the whitepaper states, “This healthy pipeline is spurred by various factors. The most prominent of these is the Affordable Care Act (ACA), the landmark legislation that has expanded health coverage to millions of Americans.”

The impact of the ACA for M&A activity: “A jump-ball” effect where “smart players and money are chasing after growing areas,” states SDR Ventures Principal Chris Bouck in the whitepaper. “Investment bankers and other M&A players are now at the center of industry consolidation and are using their expertise to help companies take advantage of deal opportunities presented by the regulatory changes,” writes Sibayan.

Specific hot healthcare sectors include service areas that drive cost out of the system, such as specialized practices, urgent care, outpatient services and ambulatory care, according to Bouck. Additionally, states Bouck, physician groups have become hot targets, particularly as roll-ups and consolidations for private equity.

With the fierce competition has come elevated valuations, with EBITDA multiples reaching 12x. But as of yet, valuations haven’t created a sizable roadblock to getting deals done. “Buyers are looking for fast-growth and profitable companies right now, and we haven’t seen this being a problem in getting deals done,” Bouck says.

To download the free Axial whitepaper, “Wealth in Health: The Current State of Healthcare M&A,” follow this link.

Business Services M&AAn additional Axial whitepaper just released explores another momentous industry, business services. As with the healthcare industry, business services M&A activity is on pace with 2014, and several key segments are standing out as big winners right now, and likely for some time to come.

The whitepaper quotes SDR’s Chris Bouck on the topic: “It really now is an information-driven economy.” Bouck points to “continued outsourcing, the large addressable market, and the implementation and management of technology. We see these as really huge drivers in the business services space and we don’t see that abating.”

Software as a Service (SaaS), and cloud-based software, in particular, are driving the industry upward.

In the whitepaper, SDR’s Bouck highlights specific segments in which he expects to see heightened acquisitions activity. These include:

  • Education and training
  • Regulatory services (as government gets bigger)
  • IT services (due to the information-driven economy)
  • Logistics services (with technology being used to move goods)
  • Business process outsourcing (BPO)
  • Asset integrity management services (AIMS)

Bouck highlights asset integrity management software and systems as a small, yet rapidly growing segment as companies are attempting to better track and maintain existing infrastructure.

As for business services M&A activity, the industry is ripe for massive consolidation. The whitepaper cites a highly fragmented industry and companies looking to supplement organic growth with acquisitions as key drivers of future business services M&A.

To download the free whitepaper, “Ripe for More Mergers: Business Services in an Information-Driven Economy,” please click here.

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SDR Ventures offers transaction advisory, private capital formation and business consulting services across a wide range of industries including healthcare and business services. SDR serves business owners and operators of privately held companies and provides them with a professional-class experience. Learn more about SDR’s services here.