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Healthcare seems to be a safe haven for private equity groups as the economy shifts further into a recession, according to speakers at The Deal's Healthcare Dealmaking Symposium.
Healthcare does seem "insulated from the economy," Robert DeSutter, co-head of healthcare equity investment banking at Piper Jaffray & Co., concurred. "On the strategic M&A side, there is no change; on the public offering side, there is no change. We don't need the Nasdaq. We just need to stabilize healthcare," he added. As the deals get smaller, the deals become more difficult to do. "Deals in the $75 million to $150 million [range] are harder to do, and deals seem to be getting less and less," Michael Kluger, managing director of Altaris Capital Partners LLC, said. In terms of sales, larger pharmaceutical companies have been divesting or partnering with other companies. "In particular we are starting to see big Pharma sell things that you wouldn't even consider as businesses," said Kluger. "They are looking to partner and share distribution, software applications and call centers." John Leone, partner of Paul Capital Healthcare, added that companies are even divesting manufacturing plants. "They are getting rid of anything that anchors their growth." "They have drunk the Kool Aid in divesting businesses and noncore business assets," Gordon agreed. - Maria Woehr See more stories from The Deal's Healthcare Dealmaking Symposium Categories Deal Video
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The reason that healthcare is a safe haven for private equity is that even though there are less deals, there are still deals going on, according to Chris Gordon, principal at Bain Capital LCC. "Solid companies will have access to big leverage finance," he said.
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