70% of healthcare executives expect M&A activity to ramp up this year

Last year proved particularly fruitful for healthcare mergers and acquisitions—and deals are unlikely to slow down in 2022, according to a new survey of industry leaders.

About 70% of healthcare executives believe M&A activity will increase this year, despite labor shortages, supply chain issues and inflation, KPMG reported this week. And more than half of private equity investors said they will do at least 10% more deals this year compared to 2021.

“While economic headwinds could always change the course of investor sentiment, it still looks like the strong momentum for deal activity we saw in 2021 will continue throughout all or most of 2022,” Ash Shehata, KPMG national sector leader for healthcare and life sciences, said in a statement.

What’s noteworthy is that healthcare transactions were already up a staggering 56% in 2021 compared to the year prior, with a handful topping $5 billion, PwC noted in a report published this past December.

KPMG surveyed 300 industry execs for its 2022 Healthcare and Life Sciences Investment Outlook Survey.

While rising inflation and capital costs remain real challenges to expansion, only 28% of respondents see these factors as major problems.

Most healthcare investors will be prioritizing operational efficiencies, joint ventures, and innovative products and services. Healthcare IT and telehealth are among the top targets for capital this year, the survey results revealed.

“Whether organizations are investing externally to enhance their product or service offerings or investing in technological capabilities to improve internal operational efficiencies, we expect that deals will be focused on supporting the new industry reality, one that is more digital and much more consumer-focused,” said Steve Sapletal, KPMG U.S. Healthcare and Life Sciences Deal Advisory Leader.

KPMG will be releasing its full report on Feb. 1.

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