Many private equity firms are eyeing investments in healthcare; healthcare private equity deals totaled $36.4 billion in 2016.
Forbes detailed the four principles private equity firms utilize when eyeing potential healthcare investments.
1. Identifying healthcare leaders within the field. Private equity firms identify category leaders and look to invest in these companies. Companies with rising valuation of healthcare assets may be faring well for the time being, but may not be a solid investment if those assets trend downward. Category leaders can withstand the tides and turns of the economy, and thus pose as attractive investments for private equity firms.
2. Investing in companies prioritizing efficiency. Moving forward into 2017 and beyond, efficiency is key and private equity firms are looking for healthcare companies utilizing technology and cost-saving measures to boost efficiency.
3. Being open to creativity. Private equity investors are partnering with corporate buyers and other funds in the changing healthcare environment. These types of partnerships may yield "quick roll-ups or spine-offs."
4. Executing a plan. Acquiring a company is not the end of the investment process; private equity firms need to create a robust strategy that will bolster a company's overall performance and see it through, providing sufficient support along the way.