PE HUB Healthcare Wire Highlights, 6.14.18


Pamplona Capital, private equity, healthcare,
Sarah Pringle of Buyouts. Photo by Robert Daniel, Buyouts.

Dissecting CD&R’s investment in naviHealth

It’s Thursday again, and more than one buyout shop has taken a victory lap in the universe of healthcare M&A this week.

In fact, the private equity community fueled several billion dollars of announced deal flow over the past few days. So much for a summer slowdown.

The most sizable trade was, of course, the long-anticipated take-private of physician-outsourcing giant Envision – which KKR, continuing on its healthcare tear, has claimed control in a $9.9 billion deal including debt. In other activity, Nordic Capital cashed out on European vetcare company AniCura in a deal valued at about €2 billion.

And there’s Clayton, Dubilier & Rice, which bought a majority stake in Cardinal Health’s naviHealth, the convenor of bundled payments, in a deal I’ve learned was valued well north of $1 billion … but more on that later.

The large check sizes commanded in some of the week’s highlights underscore what remains a hyper-aggressive market. And my conversations with folks in the PE community have reflected just that. Process-wise, sellers and buyers navigate sales processes much differently than they did five years ago.

In an environment where quality assets of scale are tough to come by, buyers are pulling out all kinds of “unnatural acts” to win deals and shorten the diligence cycle, one source said. At the same time, in response to sponsors’ eagerness to get out ahead of formal auctions, bankers are also trying to set up processes specifically for preemption, allowing for a long lead time once a teaser is out, according to another source. That means lots of informal meetings and fireside chats facilitated by intermediaries.

In the lower-middle market, the sellers of highly sought after physician-practice-management groups are often a large group of docs, which lends to a lot of back-and-forth dialogue and elongated processes, added another source. And I’ve also been hearing that some I-banks have become stricter in their processes, in that sponsors are not allowed to engage with lenders until a process is in its late stages.

Last year I wrote about so-called VIP or gold-card auctions becoming more commonplace, as well as the growing demand among sellers for more counterparty knowledge. What changes are you seeing in auctions? Shoot me a note at [email protected]

 

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