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Healthcare M&A Professionals Expect to Do More Deals in 2013

Most healthcare industry mergers and acquisitions expect to do more deals this year, compared with the last, though they will be smaller deals.

Earlier this month KPMG did a survey on mergers and acquisitions where the main takeaway was that most M&A professionals fully expect to do more deals this year compared with 2012.

I got hold of the healthcare portion of the survey and here are some results.

I got hold of the healthcare portion of the survey and here are some results.

A majority of healthcare respondents - 50.9 percent - representing providers, insurance companies and life science companies - agreed that they were going to be more active in dealmaking in 2013. Only 33.3 percent said they wouldn't do more deals. The rest did not respond to the question.

Overall people agreed that most deals would be middle market deals - in other words, deals under $250 million - with very few over $5 billion. When it came to saying why they felt that way, the answers from healthcare respondents were varied - 22.8 percent said that these deals were easier to finance; another 7 percent said they were less risky; 3.5 percent said the integration challenges were fewer for middle market deals and 5.3 percent responded that bigger deals require more due diligence. A whopping 43.9 percent agreed with all these four conclusions and 12.3 percent did not respond.

When asked what impact new regulations will have on ability to do deals, 8.8 percent said regulations were in fact spurring them to do deals. Another 5.3 percent declared that new regulations had indefinitely delayed their ability to do deals while 15.8 percent said those rules had caused a temporary delay in dealmaking. Another 24.6 percent said regulation was causing integration challenges while 29.8 percent of respondents didn't agree with any of these statements and nearly 16 percent did not respond to the question. 

So, the consensus is, smaller deals this year, while bigger deals will happen later.

But where will companies do the deals? China and the Pacific region on one side and Brazil and Latin America on the other each cornered 14 percent of respondent's region of choice to do deals. Again 5.3 percent of the respondents each selected India and Western Europe for dealmaking and 1.8 percent chose Russia. Nearly 44 percent said none of these regions, which leads me to believe that at least some of them may look at the United States to do deals this year.

- By Arundhati Parmar, Senior Editor, MD+DI 

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