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Healthcare IT and pharma M&A strongly supported by investment firms in 2011

Twenty-two percent of healthcare IT and pharma mergers and acquisitions in 2011 were financed by private equity, venture capital and other investment firms, according to a new report from investment bank Berkery Noyes.

[Also: M&A activity up in 2011]

In its "2011 Full Year Mergers and Acquisitions" trend report for the pharma and healthcare information and technology industry, Berkery Noyes analyzed the sector, which includes information and technology companies servicing pharmaceutical, healthcare payer and healthcare provider companies.

Berkery Noyes expects the robust activity identified in the report to continue.
“Private equity firms oversee $3 trillion in global assets and due to the global economic challenges, 30 percent of that is sitting on the sideline waiting to be invested,” said Jon Krieger, managing director in Berkery Noyes’ healthcare and life sciences group. “A lot of that money is going into the U.S. healthcare IT market to capitalize on current adoption trends and above market growth rates.”

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[Also: M&A: What is driving the market?]

Healthcare IT firms are a hot commodity now as the healthcare industry looks for ways to automate processes to remove time and cost from the system. Investors see the potential for growth in the space and are actively looking for investment opportunities.

“We’re seeing a lot of interest from both strategic and private equity buyers looking to acquire private HIT companies to penetrate the healthcare market,” said Krieger. “Their ability to leverage existing customer bases, industry knowledge and relationships often enable them to accelerate the growth trajectory of the companies they acquire.”

“Despite weak capital spending by hospitals and health insurers, healthcare IT is the top budget priority for both providers and payers,” added Krieger.

Follow HFN Editor Rene Letourneau on Twitter @ReneLetourneau.