Although the total volume of merger and acquisition activity in the health IT market decreased in 2013, aggregate deal value rose 2 percent, according to a recent report from investment bank Berkery Noyes.
The total value of deals rose from $11.63 billion in 2012 to $11.81 billion in 2013. More than one-third of this value was found in a single transaction, BC Partners’ acquisition of Springer Science & Business Media for $4.42 billion.
Adding to the increase in deal value was an increase in valuations of health IT companies. The median revenue multiple increased from 2.3x to 2.5x, while the median EBITDA multiple improved from 9.9x to 10.7x.
Transaction values are expected to increase as health IT products are becoming "increasingly necessary to achieve operating efficiencies when dealing with a $3 trillion complex, rapidly evolving landscape with respect to regulatory requirements (ICD-10, meaningful use stage 2), new payment and delivery models and declining reimbursement rates," said Jonathan Krieger, Managing Director at Berkery Noyes, in a news release. "Private, middle-market, tech-enabled companies are at the forefront of developing these emerging, niche technologies and are in high demand by strategic and financial acquirers."
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