PRWeek | 2021 Will Be Known As Year Medcomms M&A Went Into Overdrive
Several large agency groups have taken on fresh private equity capital for the first time this year and many others have changed private equity ownership.
In each case, the thesis is simple: buy your way to growth and a full-service proposition.
Full-service medcomms spans everything from pre-clinical R&D strategy through medical affairs and market access work during clinical trials, and across to the marketing and creative work for brand launches (and relaunches) – and everything in between.
Within each bucket there are several niches in a sector known for being highly fragmented.
As the larger medcomms platforms scale and their valuations rise, this has corresponded to smaller agencies also experiencing a rise in valuations.
Deal structures now tend to be more attractive to sellers than in previous years, typically tying agency owners to the growth of the overall acquiring group and not solely the performance of the target company.
The days of the five-year earnout have largely disappeared and been replaced with more favourable win-win arrangements.
As bigger groups have greater firepower to acquire, sellers continue to sell.
The 10 most active medcomms acquirers have bought 19 companies so far in 2021, with many others being acquired by other medcomms agencies or non-healthcare buyers.
The trend from 2021 is that private equity-backed acquirers are accelerating the pace of M&A across Europe and the US, in particular.
Why are we experiencing heightened activity?
The pharma medcomms market is one of the most attractive sectors to operate in. It’s worth more than $10bn in 2021 and is growing 12 per cent annually, with medical affairs and publication work making up the largest budgets across the sub-sectors.
The focus on this sector compared with other industries remains high and I can’t see the spotlight moving off outsourced pharma services for years to come.
The tailwinds keeping the conveyor belt of M&A moving include:
- Fresh private equity capital in the sector.
- A continued focus on pharma and healthcare.
- Outsourcing trends within pharma increasing and staying elevated.
- The need for more complex data and analytical requirements which can only be performed by outsourced specialists.
This all drives the market forward and acts as an additional incentive for new agencies to have innovative services at the core of their business.
One major challenge for top acquirers will be retaining culture and spark, which is often a key reason agencies are so attractive to them. I’ve seen huge strides being made by acquirers to ensure culture remains in place post-acquisition.
Independent agency owners across the pharma and life science space will have a red-hot phone line as the private equity-backed platforms continue to grow through acquisition.
Managing Director James West provides his perspective in PRWeek on private equity trends in the medcomms sector.
- Sign up to receive Lincoln's perspectives
Meet Professionals with Complementary Expertise
I enjoy working closely with clients to overcome challenging situations and to develop strategies to meet their business goals.
Managing Director | Management Board MemberFrankfurt
Mint | Hospital investors line up over $2 bn in exits as covid-19 recedes
Originally published by Mint on May 16, 2022. Lincoln International’s Gaurav Marathe, Managing Director and CEO India, discusses hospital chain performance during the pandemic and future considerations for investors. Click here… Read More
The Corner Series Podcast | Investor Interest: What’s Happening in Home Healthcare?
Barry Freeman, Managing Director in Lincoln’s Healthcare Group, joins Geoff Cockrell, host of the The Corner Series podcast, to discuss trends and investing opportunities in home health, hospice and palliative… Read More
M&A Activity Remains Strong for Companies Supporting Employer-Sponsored Health Benefits
Employer-sponsored, self-funded medical plans have grown in popularity since the implementation of ERISA in the 1970s and now cover nearly two-thirds of all employees and one-third of all Americans. Medical… Read More
Scrip | What Does 2022 Hold For Biopharma?
Originally published by SCRIP on February 8 , 2022. James West, Director in Lincoln’s Healthcare Group shares that there has been increased private equity firm’s interest in the Biopharma space and… Read More
Recent Transactions in Healthcare
Lincoln International has advised Seven Hills Capital in raising capital for Reliable Medical
Lincoln International has advised TPG on acquiring minority stake in Dr. Agarwals Eye Hospitals
Lincoln International has advised Amazing Care, a portfolio company of 3 Rivers Capital, on recapitalization by Bow River Capital
Lincoln International has advised Thompson Street Capital Partners on the sale of Healthcare Linen Services Group to York Private Equity
Lincoln International has advised Qure.ai on receiving an equity investment from Novo Holdings, HealthQuad and MassMutual