Mergers & Acquisitions Trends for the Healthcare Sector

As the broader economy navigates a volatile first quarter, questions loom over what lies ahead for the healthcare mergers and acquisitions (M&A) landscape in 2025. To bring clarity to this evolving market, we begin with a real-time assessment of overall M&A conditions—providing essential context for the trends unfolding within healthcare and its various subsegments. Complementing this market snapshot, we’ve also engaged leading experts to share their insights on the challenges and opportunities shaping healthcare dealmaking today.

North American M&A Market

For business owners considering a sale or acquisition, it’s helpful to understand the recent M&A market cycle. In 2021, North American M&A activity reached an all-time high of $2.7 trillion, driven by low interest rates, a backlog of deals from the pandemic, and strong buyer demand. Activity cooled in 2022 and 2023, as rising interest rates and greater caution from buyers led to a decline in deal flow—dropping to $1.7 trillion by 2023, according to PitchBook. Encouragingly, 2024 has brought renewed momentum in terms of transaction activity. As buyers adjusted to the higher rate environment and became more active, 2024 transaction value climbed roughly 16% over the prior year, reaching $2.0 trillion.

While the first quarter of 2025 was robust, there was a slight decline in year over year deal count of approximately 2.0%, according to Pitchbook. Furthermore, with recent geopolitical and macroeconomics developments, including tariffs, lowering consumer confidence, and a Q1 2025 contracting U.S. GDP, transaction professionals are closely monitoring how this might impact M&A activity.  For those investment banking advisors like me that have been through more than one market dislocation and seen the impact on M&A activity, there are a few general observations I can provide:

• Businesses and practices that have focused on building stable, profitable and growing organizations retain value in even the most challenging of markets.

• There is a tremendous amount of capital (over $1 trillion) that is currently searching for investment into privately held companies. This “dry powder” is a tremendous present and future driver of transaction activity. 

• In more challenging M&A markets, the difference in terms of transaction value between the highly attractive companies and the rest of the organizations that are selling is even greater. 

• Regardless of the market, buyers will only pay a premium value if they are forced to compete in a competitive process managed by an experienced investment banking advisor. 

Healthcare M&A Market

Whether it involves physician practice groups, healthcare technology firms, or general healthcare services, the sector continues to generate significant interest from both financial sponsors (i.e., investment groups) and strategic buyers. While overall healthcare M&A transaction value declined from 2022 to 2024—driven by many of the same macroeconomic factors that impacted the broader M&A market—healthcare has remained one of the most active and resilient segments. According to Pitchbook, healthcare accounted for approximately 11.0% of global deal value in 2024, totaling $112.6 billion. At Bundy Group, we’ve closed numerous healthcare transactions over the past year and continue to manage a strong pipeline of client engagements, all of which are attracting substantial buyer interest. This reinforces our conviction that healthcare remains a durable and highly attractive sector for M&A activity.

A panel of experts, who specialize in the healthcare market, have provided their insights on the industry today.

Segment to Spotlight: Physician Practice Management

The physician practice management (PPM) segment is a massive portion of the healthcare economy. Within PPM, there are numerous specialties, including dermatology, cardiology, urology and podiatry, and even primary care, to name a few. Over the past decade, financial sponsors have become active investors into many of these healthcare subsegments.  The financial sponsor playbook has been to invest in more sizable practices, a “platform,” and then complete “add-on” acquisitions to that platform.  This playbook allows the financial sponsor to grow its investment and then exit through a sale, thus achieving a return for its investors.       

Dana Jacoby:

Dana is the founder/CEO of Vector Medical Group, a consultancy group focused on healthcare M&A and strategy. 

“In 2024, investment in the physician practice management (PPM) space slowed due to a shift toward medtech and AI, combined with rising interest rates and declining reimbursement rates. These economic headwinds temporarily dampened enthusiasm for PPM and “second bite” deals, creating skepticism among physicians. However, 2025 has brought renewed investor interest as market expectations stabilize and successful second bites reemerge, particularly in urology, orthopedics, dermatology, and aesthetics. Ancillary services and specialties like cardiology, plastic surgery, and dermatology are gaining momentum, with a focus on high-margin, ambulatory surgery center-friendly, and cash-pay models. Financial sponsor investors are recognizing that while tech is transformative, quality care still hinges on physicians—making now a prime moment to invest in well-run practices focused on strong patient outcomes.”

Stewart Carlin: 

Stewart is a Managing Director with Bundy Group, a boutique investment bank, where he specializes in advising practice owners in business sales and capital raises. 

“The PPM sector is a large and diverse market, with each specialty presenting its own set of growth drivers, challenges, and opportunities. Bundy Group actively advises across a range of these specialties and continues to see strong interest from financial sponsors seeking to deploy capital or serve as a strategic exit partner. A clear valuation gap remains between practices that have built a scalable, transferable business and those operating more like lifestyle practices. Regardless of immediate sale intentions, we consistently encourage practice owners to build toward a transition-ready model—one that maximizes long-term value and optionality.”

Segment to Spotlight: Healthcare Technology

The healthcare technology sector remains a high-demand area for M&A activity, particularly among financial sponsors and their portfolio platforms. Key subsegments attracting investment include care management, revenue cycle management, and clinical documentation. The market is currently valued at approximately $313 billion and is projected to grow at a robust annual rate of 16%. Given this pace, the sector is expected to sustain strong transaction volume and investor interest in the years ahead.  

Kristen McDermott Woodrum and Jennifer Shanley

Kristen and Jennifer are healthcare attorneys at McGuireWoods and have extensive experience in the healthcare technology segment.

“We are seeing that healthcare technology remains a priority sector for M&A and investment opportunities, particularly in areas like revenue cycle management, AI-enabled diagnostics, virtual care, and patient engagement platforms. Investors are actively targeting scalable, compliance-ready solutions that improve clinical and operational performance. Regulatory headwinds persist, but well-positioned companies, particularly those that align with value-based care and digital enablement, are attracting strong strategic and financial attention.”

Stewart Carlin

Stewart is a Managing Director with Bundy Group, a boutique investment bank, where he specializes in advising practice owners in business sales and capital raises. 

“In spite of deal volume being down in Q1 2025 compared to Q1 2024, the market dynamics of increasing demand for healthcare, coupled with rising costs, continue to paint a favorable long-term picture for the healthcare technology sector. The integration of AI and data centered care models in healthcare systems is transforming the industry, making it more responsive and adaptive to patient needs.  At the same time, technological advances in automation are integrating into healthcare to improve resource management and deliver operational efficiencies while improving patient experience. This ongoing convergence of technology and healthcare continues to create a dynamic and rapidly evolving landscape that will continue to be a primary focus of both strategic and private equity investors.”

Segment to Spotlight: Skilled Care & Behavioral Healthcare

Skilled care and behavioral healthcare are two highly attractive segments within the broader healthcare services market. Skilled care involves medically necessary services provided by licensed professionals—such as nurses and therapists—typically delivered in skilled nursing facilities, rehabilitation centers, or through home health. Behavioral healthcare encompasses treatment for mental health conditions, substance use disorders, and developmental disabilities. The abundance of companies offering these value-added services, combined with significant consolidation opportunities, continues to drive robust M&A activity across both sectors.

John Arnold

John is a healthcare attorney at Holland & Knight and has extensive experience in the behavioral healthcare and healthcare services segments.

“The fragmented behavioral health market continues to attract significant investor interest, driven by favorable regulatory tailwinds and sustained demand, especially among adolescents, that is partially a result of increased prevalence. Maturing platforms seeking expansion, private equity firms eager to deploy capital or, in some cases, eager to exit older investments, and technology enhancing efficiency and outcomes are all fueling deal activity.

Currently, we’re riding a second wave of investment in autism services, alongside ongoing interest in adolescent mental health and renewed interest in IDD. And, overall, the strong underlying demand and technological advancements point to continued M&A growth this year.”

Stewart Carlin

Stewart is a Managing Director with Bundy Group, a boutique investment bank, where he specializes in advising practice owners in business sales and capital raises. 

“Growing demand, driven by a need for expanded access to care, continues to be a tailwind for M&A activity in the behavioral healthcare sector. Consistent with trends in 2024, ABA therapy, substance use treatment, and telehealth services for mental health continue to be promising areas of opportunity. An evolving regulatory landscape, particularly related to reimbursement policies and mental health parity laws, creates a more dynamic environment for dealmaking but can also bring added opportunities for growth. While the valuation spread between broader healthcare services and behavioral health has narrowed over the past years, high-quality businesses demonstrating a strong track record of patient outcomes and operational efficiency can achieve premium valuation multiples in a competitive process.”