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In the pharma outsourcing segment, the increase has been particularly significant, with assets that were trading at around 11-13x before Covid, reaching 15x plus after the pandemic.” The pharma outsourcing space is mainly composed of global companies that were able to adapt quickly to the pandemicĪmong the highest multiples seen by the market in Q1 was the sale of Prescient Healthcare, bought by Bridgepoint from Baird for a mid to high double-digit multiple while biometrics clinical research company Phastar was acquired by Charterhouse at a multiple of around 15x. Hence why multiples that were trading at high-single and low-double digit before the pandemic, moved to low-double and mid-double digit in Q1 2021, respectively, due to the scarcity of these assets. “Private equity firms have become eager for businesses that were growing pre-Covid and during the pandemic were able to adapt and continue to outperform. “Uncertainty spread by the pandemic has caused a flight to quality from private equity firms all over the world, increasing competition in a rarefied market with a limited number of outstanding assets,” says Jassal. Interestingly, the same number of deals that completed in nine months was equal to the number of deals done in a normal 12 month period, likely driven by the foreseen tax impact.” Uncertainty spread by the pandemic has caused a flight to quality from private equity firms all over the world, increasing competition in a rarefied marketĬonsidered a safe haven and an arsenal of promising assets by many private equity firms, healthcare has recorded a steady increase in average entry multiples, which have climbed to 12.6x in Q4 2020 and reached 13.7x in Q1 2021. A large volume of these deals in the UK were completed by Q1 2021 to avoid the hike in capital gains tax. Jassal says: “Deals that had been put on pause in 2020 due to the pandemic, were eventually back up and running within a couple of months once the market adapted to working in lockdown. In addition, numerous players across the healthcare sector have benefitted from public contracts with state-owned health services like the NHS in the UK.”Īn additional factor that has contributed to keeping deal flow volume stable and buoyant, at least in the UK, has been the rush to get deals across the line before the increase in capital gains tax rates expected for March 2021, which ultimately did not come to pass. However, even the most impacted segments have been able to recover and adapt to the new environment, implementing an intensive use of technology to meet the needs of their clients, from virtual consultations to digital tools aiming to streamline processes and providing better data to healthcare professionals. “The only segment negatively affected early on, primarily due to social distancing measures, was consumer healthcare, which includes a wide range of activities, such as dentists, clinics, practices and cosmetic surgery. “Healthcare has been one of the leading sectors over the last 12 months, recording a stable volume of deals and a significant increase in valuations,” says Ramesh Jassal, International Head of Healthcare at Clearwater International. In the UK, Nordic Capital launched a take-over offer for Advanz Pharma, valuing the company at more than $2bn, while in the Netherlands Triton invested in Bergman Clinics, a portfolio company of NPM Capital. Healthcare has been one of the leading sectors over the last 12 months, recording a stable volume of deals and a significant increase in valuations The deal valued the business at €2.2bn, equating to a 14.1x entry multiple.

Meanwhile, Charterhouse sold its majority stake in Cooper Consumer Health, a France-headquartered provider of generalist over-the-counter self-care pharmaceuticals, to CVC Capital Partners. Reflecting the rising interest in healthcare assets, the sector saw several large deals across Europe, including the €4.5bn acquisition of French medical business Cerba HealthCare, bought by EQT from Partners Group. By comparison, 28 buyouts were signed in Q4 2020, for a total enterprise value of €5bn and 26 in Q1 2020, worth €8.3bn. According to Unquote Data, 23 buyouts were inked across the sector between January and March 2021, for an aggregate value of €11.2bn. Reinvigorated by the massive boost in financing and attention received with the spread of the pandemic, the healthcare sector saw multiple valuations pick up in Q1 2021 and hit a record high of 13.7x.įurthermore, the healthcare market recorded a stable dealflow and a significant increase in deal value compared to previous quarters.

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