Political uncertainty will be the biggest factor that could upend healthcare transactions according to a recent Merrill InsightTM poll of global mergers and acquisitions (M&A) professionals. However, most M&A professionals still see a positive outlook for healthcare and life sciences deals next year.
The positive outlook is tempered by 35 percent of respondents citing political uncertainty as the most likely factor to sink healthcare deals in the next year. This concern came ahead of investor confidence (22 percent), data privacy (21 percent), antitrust/competition (14 percent), and national security regulations (6 percent).
According to the poll, which included more than 200 respondents from the Americas and Europe, the Middle East and Africa (EMEA), 52 percent of respondents believe that the M&A market is headed in a positive direction in the next year. This is a 12 percent jump from the results of Merrill Insight’s November poll, where 40 percent of respondents anticipated a positive outlook and 48 percent believed the market was headed in a neutral direction.
“This aligns with the steady stream of transaction activity we are seeing from our healthcare and life sciences clients,” says Rusty Wiley, chief executive officer of Merrill Corporation. “The number of projects we are managing is up almost 12 percent compared to the same time last year. The shift to a technology-based business environment is pushing life sciences and healthcare companies to acquire or form partnerships to build better data and customer-centric capabilities.”
Wiley notes that the healthcare landscape is becoming increasingly difficult for dealmakers to navigate, pointing to the U.S. entering a major election season and questions still surrounding the details of Brexit. He also says the healthcare industry is still grappling with how to operationalize and protect vast amounts of data, as well as how to “attract technology talent needed to capture that opportunity.”
The poll numbers bear this out. Respondents said the hardest part of getting a healthcare deal right is talent assessment (35 percent), followed by data privacy compliance (22 percent), and regulatory communications (16 percent). From a due diligence standpoint, respondents overwhelmingly said that finding all the red flags (57 percent) was the hardest part of the process. Predicting buyer interest (16 percent) was next, followed by data security and control at 12 percent.
But while the poll showed that technology will drive the most opportunity in population health and precision medicine (25 percent), data connectivity (40 percent) is the greatest obstacle to harnessing the technology opportunity.
Editor and Director of Medical Content