BDO Perspective Private Equity Study Shows Healthcare Likely to See Rising Valuations

By Patrick Pilch and Ryan Guthrie

Private equity fund managers are being prudent about deploying their large casks of dry powder in 2016. However, two industry segments continue to thrive amid the economic flux hanging over from 2015: healthcare and biotechnology; 63 percent of fund managers said they are the most likely sectors to experience rising valuations this year. Technology is the only industry garnering greater optimism, with 68 percent of fund managers expecting to see rising valuations.

According to BDO USA’s 2016 PErspective Private Equity Study, an annual survey of more than 140 private equity fund managers in the United States and Western Europe, 17 percent of firms feel healthcare and biotech offer the best investment opportunity in 2016, a slight upswing from last year when 15 percent of funds held that sentiment.

Private equity (PE) firms were extremely active in healthcare/biotech deals last year. This trend is largely expected to continue in 2016 as healthcare service providers continue to consolidate, and as investors maintain interest in emerging healthcare technologies, such as mobile apps and telehealth.

While PE interest in some healthcare segments, such as hospital and inpatient services, has been tempered up to this point, PE funds are active in specialty areas such as behavioral health, dermatology and pain management, where they can leverage their operational expertise through a buy-and-build strategy and scale.

For more information on private equity activity and investor perspectives, see the full report at: https://www.bdo.com/news/2016-february/private-equity-activity-maintains-holding-pattern