As we approach the end of Q3 and look ahead to 2024, a number of factors are shaping deal making for PE firms investing in healthcare and their portfolio companies. Below we review the issues and trends to keep on your radar as you plan ahead. Scan the QR code or click below to view and download our initial 2023 Healthcare Private Equity Outlook & Trends publication released in January 2023.
A DEEPER DIVE: HEALTHCARE PRIVATE EQUITY OUTLOOK & TRENDS FOR 2023
1. Considerations in the Debt Markets – Current and Future Credit Facilities
BY: KATIE DAY AND KATIE SMALLEY
As discussed in the initial 2023 Healthcare Private Equity Outlook & Trends publication released in January 2023, sponsors and company management faced a number of notable headwinds as they entered 2023, including ongoing supply chain and workforce disruptions, Federal Reserve rate hikes and continued, albeit slightly less acute, inflation pressures. Amidst this uncertain market, stories of bank failures dominated news cycles and are expected to have a lasting impact on the availability of debt financing sources for emerging companies. In addition to these larger market trends in both established banking and non-traditional financial providers, stakeholders in the healthcare sectors continue to navigate novel issues in an ever-changing regulatory landscape. Debt finance providers have understandably become more conservative in their underwriting of healthcare enterprises, which has, in turn, reduced options for would-be borrowers seeking funding. Growing concerns over cybersecurity and privacy risks, alongside increased reimbursement and billing scrutiny, have continued to impact the ability of growth-focused companies to attract and retain traditional lending sources. The collapse of Silicon Valley Bank and the related scrutiny on other regional and industry- focused traditional banks has also left a significant hole in the traditional debt financing market for venture capital-backed and low mid-market companies. As a result, non-traditional lending arrangements have continued to gain a growing share of the market in healthcare debt financing.
1 HEALTHCARE PRIVATE EQUITY: Q3 2023 OUTLOOK & TRENDS IN M&A |
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