Transaction volume declined in Q1, reflecting a broad reduction in volume across most sectors, fewer platform transactions, and a modest dip in sponsor exits. In contrast to the downward trend in completed deals, investors and operators were very active in Q1, preparing and launching M&A processes. Provident expects a significant rebound in Q2 and Q3 activity, largely focused on high-quality assets, new platform formations, and sponsor exits. Gradually improving financing markets and significant equity dry powder will support near-term activity in deal processes with an increasing convergence of buyer and seller valuation expectations.
While investors have a high bar for new platforms in historically consolidated sectors like physician practice management, interest remains high for assets with resilient revenue profiles and proven growth in fragmented sectors. In parallel, other investors are prioritizing assets with B2B, cash-pay, or outsourced services models to diversify from reimbursement risk, while preserving exposure to attractive healthcare tailwinds. This has led to significant transaction activity in sectors including pharma commercialization, staffing, and other tech-enabled services.
After recent stretches of uneven acquisition activity, the Provident team expects a steady supply of businesses coming to market in 2026, paired with more aligned underwriting conditions.
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