We are pleased to release our annual healthcare M&A review, analysing M&A and private equity activity across the UK healthcare sector in 2024.
The report highlights the most active sub-sectors within the healthcare market and includes deep dives into various areas of interest, along with a month-by-month summary of the key deals across the market.
2024 Healthcare M&A Overview
Deal volumes
Against a challenging backdrop, the healthcare M&A market maintained solid performance in 2024, with deal volumes increasing by 13% against 2023
Volumes have been driven by smaller deals (generally sub-£30m), with higher value transactions proving harder to come by for both private equity and corporate acquirers
This was evidenced by a rush of deals in October due to SME owners looking to lock in favourable capital gains tax rates in advance of anticipated increases in the Autumn budget
Sub-sector activity
Digital transformation remains a key driver of transactions, with digital health being the most active area of the market in 2024. Transactions were focused on areas such as care management software, electronic patient records and compliance software
Medical equipment showed strong activity driven by private equity, covering a range of areas including mobility, imaging equipment and single use devices
The residential care sector (spanning both elderly and specialist care) has maintained positive deal activity, however recent NI and National Living Wage changes are likely to negatively impact volumes in this area of the market in 2025
2025 outlook
Limited economic growth and stubborn inflation/interest rates will likely mean deal activity stays relatively stable in 2025
We expect activity to be strongest across clinical services, digital health and medical equipment, with reduced activity within social care due to cost pressures and uncertainty over funding
Private Equity Activity
Private equity involvement
Private equity continues to play a significant role in the healthcare sector, drawn to the market's stability and growth potential
Consequently, more than half of all transactions in 2024 involved private equity, either directly or indirectly
Limited opportunity for larger platform deals and a strong desire to invest into healthcare means that several funds are looking at smaller deals in the £1-3m EBITDA range where good opportunities exist for either organic or acquisitive growth
Sub-sector focus
Platform deals have generally been focused on the following areas:
Medical equipment: particularly where a buy and build opportunity exists in fragmented areas of the market
Clinical services: private pay and outsourced NHS services due to growing demand and positive drivers in both areas
Care: covering a broad range including specialist residential care, elderly care and clinical homecare
What are private equity looking for?
Growing healthcare businesses generating £1m+ of EBITDA
Operating in a stable or expanding area of the market with limited political or economic risk
A credible five-year plan which will deliver the required returns for investors (an IRR of 20%+)
A strong and investable management team that can be backed to deliver the growth plan