HEALTH & SOCIAL CARE M&A: THE CHALLENGES, TRENDS AND OPPORTUNITIES


Laura Clarke
15 June '23

4 minute read

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On Thursday 25 May, Health & Social Care business leaders and industry experts flocked to London’s Royal Society of Medicine for Cooper Parry Corporate Finance’s fifth annual Healthcare event.

On the agenda: an exploration into the future of Health & Social Care and innovation’s role in shaping it, led by guest speakers and panel participants at the forefront of the space’s challenges and transformations.

The first of those speakers was James Silk, Partner at CIL Management Consultants. James leads the Healthcare & Life Sciences practice at CIL – a global growth strategy consultancy, focusing on M&A support, value creation, pricing strategy and analytics.

After being included in Health Investor’s 2022 Power50 list as a sector specialist, James joined us to share the advice he gives to management teams and investors across Healthcare, Social Care and Life Sciences, and his views on current M&A interest in the space.

As the clinking drinks and lively chatter died down, James took to the stage. Below, you’ll find a summary of everything we learnt in a nugget-filled session.

THERE’S OPTIMISM BEYOND THE HEADLINES

Despite the backdrop of widespread challenges in the news, there is still a lot of positive activity going on in Health & Social Care, James told us.

The primary demographic across the sector remains relatively familiar. People are getting older. People are getting sicker. But they’re still rich. While growth is low, it’s consistent, robust and can be relied upon – more like a Skoda than a Ferrari – which is a big positive from an investor standpoint.

It’s not all about the older demographic, however. Mental health challenges among young people have encouraged investors to look for opportunities to support businesses in and around these areas. Plus, in the specialist care space, there is a robust population of people of all ages that need support, and anything that businesses can do to address those needs will remain important for investors.

THE SAME CHALLENGES STILL EXIST

Staffing remains tough for businesses in the space. Unemployment is stubbornly low. And while there’s a narrative around The Great Retirement, The Great Sickness is more relevant, explained James.

The number of people off work with long term sickness has increased from 1 million pre-Covid to around 2.5 million this year. Add in the growing impact this has on the Health & Social Care space, and there’s a vicious cycle flowing through.

Currently, the hospital waiting list here is the same as the population of Switzerland, and there’s a hidden waiting list of 3 million more people too.

But, it’s not all doom and gloom. There’s a big opportunity for providers helping to ease this backlog and investors want to back these kinds of businesses. Several private equity houses have established Impact Funds to invest in companies creating social or environmental change. And infrastructure investors continue to invest in a whole range of social care assets.

WHAT ARE INVESTORS LOOKING FOR?

Investor demand exists in a number of areas of Health & Social Care. Particularly, pathway management businesses making the care journey smoother for patients, businesses taking demand away from the NHS, either through outsourced contracts or private pay, and businesses helping the NHS to find ways of tackling the waiting lists.

The quality of your business remains front and centre in the investors’ priorities, especially given the regulators’ growing powers and the importance of public opinion to investors.

So, ask yourself these questions. How differentiated are you? How do you ensure a commitment to quality and think about risk management? How have you grown? What evidence and data do you have to prove all the above? And where does your business go if a PE exit occurs?

If this has sparked any questions of your own about considering private equity investment or selling your business, when the time is right, we’d love to chat.

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