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Gastroenterology: An Emerging Trend in Private Equity Healthcare Transactions
October 9, 2019
Written by Vincent M. Kickirillo, CFA, CVA, Savanna Dinkel, Landon Miner
Over the past 10 to 15 years, private equity (“PE”) firms have displayed an increasing interest in the healthcare provider industry. Recently, PE firms have set their focus on certain specialty physician practices with the intent to consolidate and grow practices in traditionally fragmented markets. Historically, ophthalmology and dermatology practices, among others, have been the targets of PE consolidators; however, gastroenterology (“GI”) has emerged as a specialty of interest. In 2016, the first major PE transaction in the GI physician practice space occurred between Audax Group and Gastro Health. Since then, GI physician practices have been hot targets for PE buyers, a trend expected to continue in the coming years.
There are a multitude of attributes that attract potential PE buyers to GI physician practices. In particular, the current GI market dynamics and opportunities for PE firms to create value are driving the investments in this space.