The PE time bomb — Provident’s Abe M’Bodj on where investment in GI is headed in 2019

While three private equity firms have invested in gastroenterology to date, several analysts believe more deals are on the way in 2019.

Here, Provident Healthcare Partners Senior Analyst Abe M’Bodj analyzed the current state of the market and offered insights into what the rest of the year could look like as well as how all PE firms can coexist.

Question: Several analysts believed the beginning of 2019 would further ramp up PE investment in GI firms. Why haven’t there been any deals closing in 2019?

Abe M’Bodj: While the activity did ramp up at the end of 2018, the [Southlake-based] Texas Digestive Disease Consultants and Atlanta Gastroenterology Associates deals were transaction processes that were ongoing for a fairly significant amount of time.

As you might imagine, these transactions are complex and on average take about nine months to a year or more to complete. The vast majority of GI practices that are currently exploring the market had their interest sparked by the TDDC and AGA transactions. With those transactions just complete, we expect to see a much larger pickup in activity during the latter half of 2019 and in the beginning half of 2020.

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