Healthcare M&A Activity Reaches 3-Year Low, But It Might Pick Up in the Back Half of ‘23

In the second quarter of 2023, the healthcare sector experienced a notable decline in merger and acquisition (M&A) activity, plunging to a three-year nadir with just 245 deals. This marked a 7% decrease compared to the same period the previous year and a substantial 41% drop from 2021 levels, according to a report by KPMG. However, despite this downturn, there is cautious optimism for a potential resurgence in the latter half of the year. Several factors contribute to the potential revival of M&A interest in the healthcare industry. One significant driver is the shrinking valuations of healthcare companies. Lower valuations may now make these companies more appealing to potential buyers who had been deterred by historically high healthcare sector valuations in recent years. Additionally, healthcare organizations are increasingly divesting non-core assets, which could spur M&A activity as buyers seek strategic acquisitions.