HBI Deals+Insights / News

Could the PE tap be turned off?

Changing macroeconomic conditions – specifically a reduction in the availability of credit and increases in interest rates, could well impact M&A activity over the coming months.

Over the last few days, HBI has been seeking out analysts, bankers and operators to find out whether we might be facing another crisis like 2009 – or whether this will all blow over.

HBI members with access to Deals+Insights can see our full piece next week, but here is what we have learned so far on whether the PE tap could be turned off.

A minority of those we have spoken to so far are very concerned that deal flow could as much as half – and that services will be hit harder than, say medtech or pharma. Throw in the global workforce crisis, and the future is less than rosy.

But the majority of our contacts are, currently, more optimistic. Healthcare is still a lot safer than many of the other options, and there is a lot of dry powder and still a desire to invest. “People want to spend money”, one operator told us, “and where else are they going to put it that’s safer?”

Big deals are still going through/in the pipeline it seems. This week’s publication talks about the prospective sale of European Dental Group and the merger between dental groups Portman and Dentex, with low to mid-teen multiples being bandied about. This can only be good for confidence.

But even the most optimistic among those we spoke to accept there is some uncertainty and there will, at best, be something of a slowdown from the heady early post-lockdown days when everyone was desperate to deal again.

2009 again? Probably not. The PE tap will not be turned off. But it may not flow quite so fast.

We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.