Q1 Market Update: M&A Activity Slows as COVID-19 Alters Market Environment
Following an active year of consolidation in the healthcare services industry in 2019, M&A momentum in the sector continued into the early months of 2020. Private equity firms have raised record amounts of capital in recent years and have actively sought opportunities to deploy this dry powder, while strategic acquirers have continued their pursuit of add-on acquisitions to increase their size and scale.
However, while these dynamics are expected to persist for the foreseeable future, consolidation activity in healthcare services and across global markets dropped precipitously in March driven by the COVID-19 pandemic and the economic and public health uncertainty that has come with it. While the duration and continued impact of the virus remains uncertain, transaction closings are expected to be delayed in the near-term as private equity firms focus their efforts on keeping existing portfolio companies afloat, and lenders work with existing portfolio companies drawing down revolvers. While the virus has led to emergency only care across many sub-sectors, providers have turned to telehealth to continue to provide care to patients through these stay-at-home orders. Provident will continually monitor the impact of COVID-19 on the transaction environment across healthcare services.
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