Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Navigating the Pause with Amber Walsh of McGuireWoods LLP 4-16-25
Wed, 16 Apr 2025
In this episode, Amber Walsh, Partner at McGuireWoods LLP, joins Scott Becker to break down Q1 2025 trends in healthcare private equity dealmaking.
Chapter 1: Who is Amber Walsh and what is her role in healthcare private equity?
Amber, why don't you take a second and introduce yourself and then let's dive into what you're seeing in the healthcare private equity deal market.
Thank you, Scott. Like you said, Amber Walsh, Healthcare Transactions Partner at McGuire Woods. I love looking at all the data that comes back in every quarter reported from a variety of sources. It's all crunched in different ways by different reporting bodies.
Chapter 2: What are the key trends in Q1 2025 healthcare private equity dealmaking?
I love looking at that and comparing it to one, what we were expecting coming into that particular quarter, and two, what it feels like now that we're well into the quarter after. And I think it's a mixed bag from Q1 2025 Healthcare Private Equity Dealmaking. I think the theme for the true Q1 all the way through the end of March was the continued cautious optimism that
That was the theme really throughout much of 2024 and early 2025. The data kind of plays out. I'll share that in a minute. But just in the past several weeks, there's been more discomfort. There's been a little bit more pausing midstream on some deals that were in motion. Definitely feeling of insecurity with volatility. None of that should be surprising to anyone. We all see it.
It's the biggest talked about concept in the news and the market reactions. And it's playing out that way in this early part of Q2. But Q1 did end up. So as you compare Q1 2025 numbers to 2024 numbers, They are as expected outside of the hospital market, which was pretty chilled, and a couple of other sectors, digital health and technology.
Chapter 3: How did healthcare private equity deal activity in Q1 2025 compare to 2024?
But depending on whose report you're looking at, ECG has a healthcare M&A report on number of deals. They also have a healthcare private equity component. The number of deals are up there. AlphaBridge is across the board PE, not just healthcare, number of exits up. KPMG's M&A-Report in terms of sheer dollars in healthcare deals up again.
But like I said, that only tells part of the story, but at least that was reflective of more activity in Q1 before we really hit the end of Q1, where people started to get a little bit more nervous again.
Right. And what are you seeing now? Because again, like B of A just reported very nice numbers for the first quarter and But there's a lot of caution bleeding into the second quarter from everybody, given the trade uncertainty and so forth. What are you hearing directly from investors about deal flow and what they're seeing? Or is there just an abundance of caution?
It's an abundance of caution, but no one is willing to go too far out on the limb in either direction, excessively negative or positive. And you can't blame anyone. It feels very, very unstable at the moment. But from my perspective, because I'm always look on the bright side person, I'm pleased with how the insecurity is kind of playing out in the deals that are pausing.
Chapter 4: What are the current market sentiments and how is caution affecting deal flow?
They're not big public proclamations of a pause in deal making. These are we're talking about health care, private equity deals where the lender, the sponsor, sometimes even the seller and the investment banker are wanting to just, hey, let's just wait and see. But nobody is giving up exclusivity. It's not a big dramatic party and we're never going to do this deal.
It's just we need to wait and see what's going to happen a little bit.
But isn't that so interesting that that seems to be the phrase of the day, the pause. That means very different things to different people. If you're a buyer, it may mean a pause. It may mean that you're really walking away.
If you're a seller, it might be the same thing, that this is now time to move on versus is it really, you know, is it, I'm so happy to hear you use that phrase, the pause, because it seems to be a phrase we're hearing all the time right now. And how do buyers and sellers take that phrase?
Yeah, you're absolutely right. It can mean different things for different deals. And I suspect that of the ones that I'm involved in that have taken more of a private pause, I'm guessing at least half of those will come back online again and not even with a reprice or any major change. Just waiting to see. We've got, you know, May 7th is the next time that the Fed is supposed to react on rates.
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Chapter 5: What does a 'pause' in healthcare private equity deals really mean?
We have a lot of, you know, we've got the 90-day pause on tariffs. We've got lots of things that both sides are kind of looking at to assess during the pause. I don't think the pause is we're going to do nothing. It's we're really going to think about this and make sure we're real comfortable on valuation, make sure we're really comfortable.
wo unsere Risikopunkte sind, wenn die Waffenwaffen weitergehen, wie sie sind, wie das uns beeinflusst wird, von wo wir unsere Implantate bekommen, was auch immer es ist, abhängig vom Geschäft. Aber ich denke, das wird während der Pause passieren. Und dann kommen viele wieder online. Aber es ist sicherlich keine Ein-Size-Fits-All-Situation für diese Deals.
Nein, ich denke, das ist wirklich ein interessanter Ansatz darauf. Und ich denke, es gibt, wie viel hören Sie von Rezessionstestungen? Wann immer Sie einen Deal durchführen, schaut jeder immer nach, wie es sich in einer Rezession aussehen wird.
Und dann, natürlich, wenn Sie einen Punkt haben, wie ein paar Wochen vor, wo der Markt 15 Prozent vergrößert ist, Sie haben eine Veränderung, 20 Prozent, Sie wissen, jetzt hat es einen Rebound. People think, oh my God, the fear is really real. So instead of thinking abstractly, we have to look at this deal in terms of what happens in a recession. How much of that discussion is going on?
Absolutely is going on. And you have all that, you know, on top of everything else that you just mentioned, you have these other economic dynamics of consumer loan delinquencies are at the highest they've been in a decade. And that plays into that, you know, what does our customer patient base look like in our particular business?
And will they, you know, continue to use our product even in healthcare, where a lot of healthcare is elective and is possible? We saw that during COVID. So I think a lot of that is going on during these periods when
Folks felt really good coming into 2025, very optimistic, but now just need to kind of think about it and make sure they're not getting totally out ahead of themselves and, you know, are going to fall off a cliff with their acquisitions.
No, thank you very, very much. I think that's really the concern. It's not that you're going to have minor changes, but it's going to fall off the edge when things go south. I think that's exactly right. You know, that's exactly right. And Amber, anything else you're seeing that you wanted to comment on?
Yeah, I mentioned earlier the hospital health systems market. That is particularly chilled. Kauffman Hall has a really good quarterly report. That is particularly down right now. But I think, you know, always the opportunity to come back there too.
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