With the US presidential election just days away, healthcare mergers and acquisitions (M&A) professionals are considering how a new presidency could impact the transaction planning, structuring and execution of deals, including how the candidates are likely to approach regulation, especially around M&A.
Diverging approaches
Candidates Harris and Trump have different approaches to regulating healthcare M&A, especially if the M&A is expected to lead to increased industry concentration.
Harris supports strict antitrust enforcement policies, especially in healthcare. As California Attorney General (AG) from 2011 to 2017, she actively opposed both vertical and horizontal healthcare consolidation, arguing that mergers involving hospitals, physician groups, and insurers could harm competition and lead to higher prices. She also supported a federal lawsuit to block the merger of two large health insurers. Given this background a Harris presidency could bring a renewed emphasis on preventing industry consolidation, potentially exploring new approaches to analyze and address competitive harm in healthcare markets.
Trump takes a more laissez-faire approach that allows for significant mergers with limited regulatory intervention. His administration approved one of the largest healthcare mergers to date, with only minimal divestment requirements. It also allowed hospital mergers within several major markets.
Given this uncertainty, dealmakers are extending transaction timelines in response to concerns over potential regulatory changes stemming from elections. A survey of more than 620 global M&A professionals in the US, UK, France and Germany shows that over 45% of global dealmakers have extended their timelines this year to accommodate potential election-related disruptions, including regulatory changes.
Benefits of M&A
Still, M&A has long played a critical role in healthcare, driving growth, innovation, and competitiveness. Despite a slowdown in publicly announced deals in the first half, healthcare dealmaking remains strong, fueled by advancements in technology, evolving patient needs, and a post-pandemic focus on digital transformation.
Americas healthcare and life sciences deal count in the first half was down by 24% year-over-year to 802 transactions, and aggregate value also fell, by 13% to $140 billion. However, last year’s performance was among the best on record, so the recent decline does not necessarily signal any meaningful trend break.
In fact, in the first half of this year alone, global healthcare and life sciences sell-side deals — particularly asset sales and mergers — facilitated by Datasite, increased by 7% compared to the same period last year. Even more strikingly, buy-side deals surged by 25%, reflecting growing interest in acquiring assets and expanding capabilities. This uptick in early-stage deal activity provides a promising glimpse of what may unfold in healthcare M&A over the next six to nine months.
Temperature Rising for Technology
Technological innovation has emerged as one of the primary forces behind healthcare M&A activity. Organizations are increasingly looking to acquire or merge with companies that offer advanced healthcare technologies to improve patient care, enhance operational efficiencies, and drive down costs.
For instance, telemedicine and digital therapeutics are gaining interest and popularity, helping to improve patient access and treatment, while driving operational efficiencies and reducing costs.
AI is also being used to improve diagnostics, personalize treatment plans, and optimize patient care workflows. By analyzing vast amounts of patient data, AI can help healthcare providers detect diseases at earlier stages, recommend personalized treatment protocols, and even predict patient outcomes more accurately.
AI in healthcare market is expected to grow from $15 billion in 2022 to $188 billion by 2030, underscoring the massive potential for AI-driven healthcare solutions. M&A activity is expected to rise as companies seek to acquire AI capabilities to improve clinical outcomes and drive operational efficiencies. AI is particularly attractive because it offers the dual benefit of reducing costs while increasing the quality of care, making it a key area of focus for healthcare providers and investors alike.
Challenges and Complexities: Regulatory Scrutiny and Due Diligence
While the healthcare M&A landscape is ripe with opportunities, competition for assets is high, and the sector’s complexity, coupled with heightened regulatory scrutiny, means that due diligence and post-merger integration are critical to achieving the desired outcomes.
Companies will need to conduct thorough due diligence and leverage expert valuation services to bridge gaps and reach mutually agreeable terms. Following that, successful M&A requires effective integration. Post-merger integration in healthcare is particularly complex due to differing IT systems, legacy components, corporate cultures, and operational practices. With the advent of AI, this has become an even bigger consideration for companies looking to acquire and requires thorough due diligence and risk aversion.
Looking beyond November, healthcare dealmakers and stakeholders will need to remain adaptable and focused on due diligence processes, leveraging opportunities as they arise while navigating the complex landscape of regulatory and political challenges. This way, they can position themselves to capitalize on opportunities, while driving long-term growth and innovation throughout their organizations and industry.
Mark Williams
Mark Williams is Chief Revenue Officer at Datasite.
