How Private Equity Views ASC Investment
Mr. Shah said there is currently private equity activity in the ASC space, explaining that the industry has "lots of potential opportunity given how fragmented the industry is."
According to Mr. Cockrell, private equity investors are looking for "a platform [they] can really scale," noting that not every industry is accommodating to that type of growth. For the ASC industry, its fragmentation does provide a significant opportunity for scale.
In addition to scalability and growth, private equity funds also make investment decisions based on the finances of the company they may invest in. For example, very large private equity funds are not usually interested in deals below a certain EBITDA because they focus on a smaller volume of high value deals. Middle-market funds, as their name suggests, are more likely to be interested in companies with a bit lower EBITDA. The panelists noted that most middle market funds are looking for companies with somewhere around $10 million in EBITDA.
Mr. Becker noted that in addition to private equity funds, venture capital funds are also potential investors in surgery center companies. In general, private equity funds look for more mature, stable groups to invest in, while venture capital funds are willing to take on a bit riskier investment.
Mr. Shah said that private equity activity in general is currently quite strong, and he hasn't seen this level of private equity investment since 2006-07. He expects private equity to continue to be quite active in the near future due to its more recent acceptance as a core asset class for institutional investors, such as pension funds.
More Articles on Private Equity Investment in ASCs:
What to Expect When Selling Interest in ASCs
© Copyright ASC COMMUNICATIONS 2016. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.
To receive the latest hospital and health system business and legal news and analysis from Becker's Hospital Review, sign-up for the free Becker's Hospital Review E-weekly by clicking here.
- C-arm for orthopedic surgery: Radiation exposure 'well within permissible limits'
- Medications, dietary supplements are a dangerous mixture — 3 things to know
- 10 initial steps following ASC medical errors
- FMT helps reduce recurring episodes of C. Diff in children: 4 findings
- GIQuIC registry hits 3M colonoscopy cases: 5 things to know