Key Insights:
- Private equity dealmaking in healthcare has continued to decline, with a 20% decrease in the first quarter of 2024 compared to Q1 2023. Only 158 deals were announced or closed in this period.
- Increased regulatory scrutiny is a significant factor contributing to the slowdown. The Change Healthcare cybersecurity attack heightened awareness of cybersecurity and HIPAA compliance risks, causing temporary delays in deal processes.
- States like California, Connecticut, Illinois, and others have implemented new deal review processes, leading to extended timelines, additional review costs, and greater public scrutiny.
- Differences in price expectations between buyers and sellers, along with the Federal Reserve’s stance on maintaining higher interest rates, have also dampened investment activity.