Dermatology in Demand in 2017
“In 2016, dermatology was one of the most sought-after subsectors of healthcare services from both strategic and private equity sponsors,” says Ajeya Shekar, Senior Associate at Provident Healthcare Partners, a healthcare focused investment bank.
We talked to Shekar about Provident’s expectations and predictions for dermatology this year.
Overall, investor interest will remain high. “Macroeconomic growth drivers such as increasing skin health awareness, a rise in skin cancers, and favorable payor mix dynamics will continue to not only support organic growth in dermatology practices, but also profitable ancillary service opportunities such as lab services, clinical trials, cosmetic products, and ASCs among others.”
Due to fragmentation, platform acquisitions within the dermatology space are limited. “This supply and demand imbalance will create significant competition for acquisition targets, and high valuations for groups of size and scale. For investors unable to secure a platform, we expect traditionally middle-market private equity groups to come downstream to partner with smaller organizations, or execute upon a roll-up strategy.”
PE firms already invested in dermatology may look to exit in 2017. Provident points to numerous private equity exits and above market returns in 2016 involving the following dermatology practices as evidence of a robust M&A environment:
- Forefront Dermatology’s acquisition by OMERS (previously backed by Varsity Healthcare Partners)
- Advanced Dermatology & Cosmetic Surgery’s recapitalization by Harvest Partners (previously backed by Audax Group)
- Dermatology Associates’ recapitalization by ABRY Partners (previously backed by Candescent Partners)
- Riverchase Dermatology’s acquisition by GTCR (previously backed by Prairie Capital)
Strategic acquirers will increasingly compete with PE firms. “With fresh capital resources and new private equity partners eager to scale their investments, we expect strategic acquirers to become increasingly competitive with private equity firms for platform acquisitions within the dermatology sector. In light of the competition for acquisition targets and positive growth drivers in the industry, 2017 is likely to be a favorable sellers’ market, both from a valuation and structuring perspective.”
With capital a commodity, owners should look for non-financial resources in potential partners too. “Carefully consider not only valuation, but also [the potential partner’s] relevant experience, thesis around dermatology, and philosophical fit with the organization.” In particular, Shekar says, look for:
- Relationships with health systems, payors, and vendors
- Board-level resources (e.g., former healthcare executives with experience scaling businesses)
- The ability to shoulder back-office capabilities such as revenue-cycle management, payor contracting, and HR (for strategic partners)
“Since these transactions are true partnerships that often last for 3 years or more, it is important for personalities and strategies to align well with management and physicians to ensure success post-transaction,” says Shekar. “We typically find successful partnerships to have a continued back-and-forth exchange of new business ideas and growth opportunities, while rooted in a model allowing providers to retain their clinical autonomy.”
For more information about selling your business, Contact Jeff Adam, PE, MCBC, FRC, CBB at Adam Noble Group, LLC
Phone: (817) 467-2161
www.adamnoble.com
Are you looking for a buyer? Search other buyers at SEARCH OUR BUYERS, email or call us to discuss your opportunity. It may fit another active buyer’s search criteria. Thinking of selling: Contact us TODAY to Sell your Business
KEYWORDS: healthcare medical obamacare dental vision doctor practice specialty dermatology hospital surgery pharmaceutical patient homecare assisted living insurance mental clinic hsa ppo hmo occupational safety nursing laser weight loss counseling therapy physical sell my health related business for sale medical devices health 510k medicine weight diet drug Durable medical equipment DME Medicaid Medicare attendant care pharmaceutical marketing braces laboratory testing optical ophthalmology vision care eyewear x-ray oxygen dental dentist scrubs chiropractor diagnostic infection lens rehabilitation biomedical instrument mobility scooters microscope surgical surgery imaging Vitrectomy oncology hyperbarics Ostomy Orthotics Massage sell my medical business for sale
During 3 decades of M&A service, Jeff Adam has successfully completed the sale of over 825 businesses and advised or completed 1,000’s of business valuations and exit plans. An entrepreneur in his own right, Jeff has started and grown 12 companies in fields including international finance, B2B services, business valuation, construction, screen printing, Mergers & Acquisitions, engineering, and manufacturing. Jeff has donated his time as a distinguished speaker at numerous national & international conferences since 1977 covering topics such as environmental services, engineering, media, craft breweries, exit planning, business valuation, charitable giving, management, business brokerage and M&A fields.
Jeff is President of Adam Noble Group, LLC, a national M&A Advisory firm, professionally valuing and confidentially selling profitable businesses owned by exit-motivated business owners to qualified strategic, corporate, private equity, partners, management, and first-time buyers. Jeff establishes rapport, builds trust, and educates business owners in the steps to meet their goals as they prepare and achieve the discreet, confidential exit of their business. Jeff exclusively represents sellers of $1M-50M value enterprises and endeavors to transfer their businesses to qualified, capable acquirers who will build upon the seller’s vision, goals, culture, and history. Jeff maintains lifelong repeat and referral relationships with sellers, their acquirers, and service providers.
Adam Noble Group has multiple M&A and business broker specialties: Manufacturing, Defense Industry, Oilfield services, Construction trades, Craft Breweries, Partnership Buyouts, Manufacturing, Service, and Wholesale Distributors.
Our M&A advisors and business brokers are all multi-industry entrepreneurs who have successfully exited their own companies. Jeff has walked in your shoes! Jeff wants to put the BIGGEST CHECK of your life in your pocket! Please contact Jeff, and he will confidentially answer all your questions.
Our GUARANTEE: a 15-minute call could REALLY change your future!