Healthcare M&A likely to be first private equity sector to recover

When the economy finally begins to stagger to its feet, expect healthcare to be the sector where the pace of M&A deals picks up the most quickly, according to a new analysis from healthcare investment banking firm Cain Brothers.

During the first half of 2009, deal flow has hit about $130 billion from 321 deals. That's not just better than last year, it's better by 60 percent, the analysis notes. Those deals include the acquisition of Coventry/First Health division by Magellan Health, Health Net of the Northeast by UnitedHealth, and the buyout of NextRx Pharmacy Benefit Management by Express Scripts from WellPoint.

Now, nobody's sure quite how health reform will affect healthcare entities, so private equity firms are playing it cool for a few months. After all, reform could do everything from pumping lots more insured folks into the system to lowering reimbursements for everybody.

But it does seem likely that one way or another, healthcare M&A is going to get very hot again, very quickly, once the health reform dust settles.

To learn more about these issues:
- read the Cain report (.pdf)

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