May 20, 2013 AN OVERVIEW OF M&A IN THE HEALTHCARE IT SECTOR

Berkery Noyes’ latest white paper covers some of the factors influencing M&A activity in the Healthcare Information and Technology (“HIT”) sector.

Healthcare IT has remained a bright spot in the macro M&A market. For instance, transaction volume improved 11% from the beginning of 2011 through the end of 2012. Deal value increased 30%, totaling approximately $6.29 billion in 2012. In addition, 78% of Healthcare IT transactions during the past 24 months were completed by strategic acquirers.

Multiples in the sector remained strong over the past two years as well. The median revenue multiple from 2011 to 2012 was 2.0x, while the median EBITDA multiple was 10.0x. Mid-market transactions in both the $20-$40 and $80-$160 million ranges received a median revenue multiple of 2.4x. Transactions above $160 million had a median revenue multiple of 3.6x and EBITDA multiple of 11.3x.

According to the white paper, observers should expect to see an increase in deal flow and attractive prices for sellers from both strategic and financial acquirers. However, strategic buyers, as in 2012, will likely dominate the Healthcare IT buyer universe.