Becker Private Equity & Business Podcast
Healthcare Private Equity: Trends, Regulations, and Growth Areas with Holly Buckley of McGuireWoods LLP 2-21-25
Fri, 21 Feb 2025
In this episode, Scott Becker speaks with Holly Buckley, Chair of Healthcare at McGuireWoods LLP, about key trends in healthcare private equity, including new HSR regulations, evolving state laws, and growing investment in healthcare consulting firms. They also highlight the upcoming McGuireWoods Healthcare Private Equity Conference on May 14th.
Chapter 1: What are the key trends in healthcare private equity?
Hey, Scott, and thanks as always for having me on. A couple of things I think are super interesting that are either impacting deals or just interesting trends. The first is the much anticipated new HSR rule is actually live and went into effect on February 10th. So this new rule is projected to lead to a substantial increase in the time and effort required to complete an HSR filing.
Chapter 2: What are the new HSR regulations and their implications?
So that's for those deals that are over the HSR threshold. And I'll apply unless the Congress or the FTC revises or revokes the rule. And there's also a lawsuit currently challenging the rule. But for now, we're up and running with the new rule. Few things to consider with the new rule.
One, the burden of production is much higher and the types of information that need to be produced are much greater. And so it's really important to get training for your deal teams and investment bankers because certain types of information that wouldn't have been previously disclosable now are, such as anything that's gone to the board related to the deal.
And so it's just really important that those drafts are all very carefully put together and You're not just relying on the final versions. And it's really important to bring HSR Counsel in much earlier to avoid delays because it's no longer going to be something you can likely complete in five to seven days. So we've been kind of waiting for this one, wondering if it's going to get pulled back.
But for now, it is actually live again.
Chapter 3: How do new HSR rules affect deal-making in healthcare?
Fantastic. What does that mean for deals? What are the new thresholds? How much more complicated is this going to make getting deals done? You know, right now, unless you're doing huge deals, it seems like the HR doesn't become that big a problem. You know, at least for most private equity driven deals, once in a while for a big private equity driven deal, you get a second request.
Certainly on the health care side, the hospital side, the government often blocks deals. hospital deals where they think there'll be market concentration but generally for the pe bolt-ons and so forth hasn't been that much of an issue what's your sense and what are people saying out there
Yeah. So, I mean, anything that's below the threshold, which it's not just a straight enterprise value threshold, it's a complex equation to kind of get there, but around $120 million, if you're under that point, based on the calculations, you don't need to do an HSR filing. So that hasn't really changed.
The bigger change is around the type of information that's going to be produced and where it's going to get more complicated, where The corporate structure is more complicated, but also to your point, Scott, where there is more overlap on geographic area and overlapping products and services or overlap on suppliers, that's where the burden is greater and it's going to be more complicated.
So I guess an easy way to think about it is for the transactions that generally would have more of an antitrust impact, whether real or potential. Those are the deals that are going to have a much larger review, much larger production, and probably longer timeframes and more likely second requests.
For the transactions where it's party A buying party B and party A is not currently in the line of business and doesn't have overlap, I think there's not going to be an awful lot of change, although the initial disclosure will be greater. So I think for those deals that do implicate antitrust laws, you can expect a longer, more painful ride.
Thank you. And that makes sense. Thank you very, very much. And tell us what else you're watching out there. The new HSR rules. I think some people, I think we're hoping those go away, go away under Trump administration. So far, not so much. So what else are you watching?
Yeah, so last year, one of the big state laws that everyone was very focused on was the California Senate Bill 3129, which would have, if it had gone through in certain of the forms that it was proposed, would have almost prohibited kind of MSOPC, kind of the private equity investment in medical and dental businesses. And Newsom ended up vetoing that law.
It got all the way to his desk and then he didn't sign it and said, look, we already have a process for this. We're not going to kind of go this far and sign this. But now there's a new California bill that's proposed, which is Senate Bill 351. This came out in the last week or so. This is very, very watered down compared to what was proposed last year. And it's much more of a
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Chapter 4: What state laws are impacting healthcare private equity?
And I was poking around this weekend and found a fair amount of these. And we've seen VMG, the kind of valuation, other healthcare consultant services business has PE investment. Coca Group took investment from Trinity Hunt. Chartus from Blackstone and Chartus is the parent company of Gerard, which is the healthcare PR firm.
And we're also seeing investment in consulting companies in the pharma services sector. And so just an area that is interesting as a professional services professional myself to see private equity kind of moving into these other areas. professional service spheres and kind of looking at how they can grow and combine and elevate. So I think super interesting.
We'll be talking about that at our conference in May as well. But just yet another area that we're going to see a fair amount of developments.
no thank you and i know that we have happened to have um vmg on our podcast yesterday talking about cyber security risk and due diligence transactions so a lot of that out there no thank you very very much in how is you've got in new hsr rules
Chapter 5: What is California Senate Bill 351 and its significance?
so the new state rules on private equity deals, you've got private equity a little bit slower into the specific provider area, but certainly heavy into the consulting area, the revenue cycle area, digital health area, lots of other areas, anything else that's top of mind currently for you that you're watching?
No, I mean, I think it's a lot of the same stuff we've been talking about. We're seeing a fair amount of exits, um, both kind of getting started and also underway and having just closed. So the exit market seems to be relatively strong, also seeing some good new deals come to market.
And so I think we're still optimistic this is going to be a good year, probably not a great year, but a really solid year. But the three we've talked about are the ones that are really top of mind for me.
Thank you very, very much. Thank you, Holly. Always fantastic to visit with you. We'll keep on following up with you. Again, Holly Buckley, Chair of the Healthcare Department at McGuire Woods, just absolutely brilliant leader in the healthcare private equity sector. Thank you very much.
Thank you.
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