Berkery Noyes, an independent middle market investment bank, today released its 2011 Full Year Mergers and Acquisitions trend report for the Pharma & Healthcare Information and Technology Industry.
The report analyzes the sector for 2011 and compares it with similar activity in 2009 and 2010. This market includes information and technology companies servicing pharmaceutical, healthcare payer, and healthcare provider companies.
Blackstone Group LP’s acquisition of Emdeon, Inc. was the largest transaction for 2011, with an acquisition price of $3.03 billion. In terms of transaction type, 22% of industry deals were financed by private equity, venture capital, and other investment firms.
“In 2011, M&A-driven expansion of strategic healthcare technology and information platforms by major players, some private equity-backed, continued as a dominant trend, stated Jeffrey Smith, Managing Director in Berkery Noyes’ Healthcare and Life Sciences group. “This trend will continue in 2012, offering an active market, competitive sales processes, and excellent valuation opportunities for independently-owned companies providing software, information, data, communications and services solutions to the healthcare and life science industries.”
Median revenue and EBITDA multiples fell from 2010 to 2011. The median revenue multiple decreased from 2.0x to 1.6x, while the median EBITDA multiple went from 11.6x to 9.0x. Although total transaction value declined 9 percent over the last twelve months, total transaction volume increased 15 percent, from 255 to 292 this year.
Based on value, the most active market segment that Berkery Noyes tracked between 2009 and 2011 was Healthcare IT with $10.25 billion worth of transactions.
“The healthcare information and technology (“HIT”) mergers and acquisitions market was robust in 2011 as buyers looked to acquire rapidly growing companies, principally software enabled solutions (SaaS and Cloud enabled), in highly attractive niches to accelerate their own growth and offer fuller suites of world class products to the dynamic and growing healthcare marketplace,” said Tom O’Connor, Managing Director in Berkery Noyes’ Healthcare and Life Sciences group. “In 2012, we expect to see an increased deal flow and attractive prices for sellers from both strategic and financial buyers, but strategic buyers, like in 2011, will dominate the buyer universe.”
According to Jonathan Krieger, Managing Director in Berkery Noyes’ Healthcare and Life Sciences group, “the number of HIT transactions increased for the 3rd consecutive year and valuation multiples continued to rise. The enactment of the HITECH Act has catalyzed the adoption of IT by both payors and providers and has resulted in a very favorable M&A market for private companies that wish to pursue liquidity events.”
A copy of the FULL YEAR 2011 PHARMA & HEALTHCARE INFORMATION AND TECHNOLOGY INDUSTRY M&A TREND REPORT is available at the Berkery Noyes website.