Private equity healthcare M&A small slice of record July

Healthcare takeover activity may have helped make July the seventh busiest month for M&A on record but don’t include private equity in the mix.

Healthcare PE deals were a very small part of July M&A. Tiny, in fact. In July, there were 21 global healthcare private equity transactions valued at $1 billion, Thomson Reuters said.

This compares to 212 global healthcare deals announced in July, with a disclosed value of $108.8 billion. This is roughly one-fourth of July’s record M&A. A total of $436.4 billion worth of deals had been concluded as of July 30, including 14 bumper deals worth more than $5 billion apiece, Reuters News said. This includes Teva Pharmaceutical’s $40.5 billion buy of Allergan’s generic drugs business.

High prices continue to keep many PE firms out of the deals market. Brian Rich, Catalyst Investors’ managing partner and co-founder, said the lack of PE M&A is a “combination of factors.” Corporations, he said, have “lots of cash, valuations are high and strategic buyers are wiling to pay the highest prices.”

New York-based Catalyst, a growth equity firm, does make healthcare investments but doesn’t use much debt, he said. “PE firms use leverage and it’s very difficult to put a significant amount of debt against these companies, because the regulatory environment has gotten harder,” Rich said.

So far in 2015, there have been 1,577 healthcare industry deals worth $395 billion, up 77 percent, Reuters said. PE healthcare totals are much lower. There have been 158 global PE healthcare transactions valued at $6.7 billion as of Aug. 4, down 37 percent from last year.

U.S. announced healthcare PE deals weren’t better. This year has seen 47 U.S. private equity-backed healthcare transactions worth just $1 billion, Thomson Reuters said.

Madison Dearborn Partners’ $715 million acquisition of Patterson was one of the larger healthcare transactions this year, TR said

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