May 30, 2018 | Press Release

New Report: Competition and Technology Rapidly Reshaping Healthcare M&A

New Report: Competition and Technology Rapidly Reshaping Healthcare M&A

M&A is playing a critical role as healthcare companies seek to adapt and thrive in a fast-changing marketplace. Pressure to lower costs and adjust to value-based care models, as well as meet the demands of a technology-driven world, have created a need for buyers to seek healthcare targets capable of evolving within the landscape. These are the main findings of a new report, “Reshaping Healthcare M&A: How Competition and Technology are Changing the Game,” released today by West Monroe Partners and Mergermarket.There were 579 deals for U.S. healthcare targets in 2017, the second-highest total on record, according to Mergermarket data. The appetite for deals is fueling a highly favorable market for sellers. For instance, the median EBITDA multiple for U.S. healthcare targets increased nearly 3x from 2015 to 2017, reaching the level of 13.8x.

For buyers, leveraging innovation to save on costs is a key motivation for deals. “Everything is about cost take-out, given the amount of competitive pressure in the industry,” said Brad Haller, a director in West Monroe’s M&A practice who co-authored the report. “All of the different stakeholders are trying to outdo each other on price.”

In spite of dealmakers’ appetites, however, respondents say the top challenge in seeking healthcare deals is the shortage of attractive targets. While definitions of “attractive” varied, they focused mainly on the dearth of targets valued at US$100m or less; the difficulty in finding companies with the right technology or products to sustain growth; and the lack of targets with the right strategic fit for their business.

“Any kind of dip in valuations, especially for biotech acquisitions, could drive a buyer’s market in the industry,” said Anthony Chambers, a director in West Monroe’s Healthcare & Life Sciences practice and co-author of the report. “It could be a prime opportunity for companies to come in and use some of the cash that’s been sitting offshore for decades.”

Meanwhile, increasingly complex technologies and aggressive deal timelines present two of the greatest hurdles to acquirers. Nearly half of respondents (49%) said they were dissatisfied with the cybersecurity due diligence in their recent healthcare deals. That figure is up from 16% in West Monroe’s 2017 "Software M&A Frenzy" report and up from 3% in West Monroe’s 2016 “Cybersecurity Due Diligence in M&A” report.

Key findings of the report include: 

  • 41% of respondents said a company’s preparedness to respond to regulatory change was a top concern when it comes to operational or personnel issues, and 40% said a management team’s willingness and ability to adapt to market trends was a top priority.

  • Only 10% of participants report being very satisfied with IT due diligence, yet 48% are driven to acquisitions to disrupt incumbents using technology. Further, 26% said that outdated IT infrastructure was the biggest oversight during due diligence in their last healthcare acquisition.

  • 79% of respondents say they will pursue alliances or joint ventures in the next 12 to 18 months

  • When comparing private equity and strategic buyer preferences, the top sub-sector of interest for PE firms is digital health or healthcare IT (21%) while strategic buyers prefer CROs and biotech acquisitions (21%).

A full copy of the report can be found here.

About Mergermarket

Mergermarket is a business development and market intelligence tool designed specifically for the M&A sector and provides proprietary intelligence and analysis on corporate strategy across the world. With around 200 M&A journalists talking directly to senior executives, dealmakers and other key players in over 60 locations globally, Mergermarket reports on the whole deal life cycle, from mapping out companies’ early stage strategic intentions to tracking deals before they develop and providing real-time news on live events, thereby creating a large window of opportunity.  Subscribers can also mine for trends, patterns and deal ideas using Mergermarket’s comprehensive deals database and regular data-driven editorial analysis and commentary. Visit to learn more.

About West Monroe

West Monroe is a national business and technology consulting firm that partners with dynamic organizations to reimagine, build, and operate their businesses at peak performance. Our team of more than 950 professionals is comprised of an uncommon blend of business consultants and deep technologists. This unique combination of expertise enables us to design, develop, implement, and run strategic business and technology solutions that yield a dramatic commercial impact on our clients’ profitability and performance. For more information, please visit


Christina Galoozis
West Monroe

Chrissy Carney
Global PR Director

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