Private equity eyes physician practice deals in 2025

After several years of "lackluster" deal activity, bankers and private equity advisors recently told The Wall Street Journal that physician practice deals are showing more promise, possibly making space for more PE firms to exit their holdings. 

In the first nine months of 2024, there were just 251 private equity investments in physician practice managers, less than half of the total for 2023, which was already down from 2022 according to Pitchbook. There were only 10 exits through September 2024, down from 28 in 2023 and 37 in 2022. 

But bankers told the Journal that "a large backlog of private-equity holdings, an abundance of capital available for deals and signs of renewed interest from both financial and strategic buyers could bolster deal momentum in 2025." They also said that there is increased interest in specialist providers.

Private equity is also reportedly sitting on $75 billion in uninvested capital in the healthcare industry and has owned more than 200 healthcare provider businesses in the U.S. and Canada for at least five years, Rebecca Springer, director of market development at investment bank Bailey & Co. told the Journal. 

“There's just an enormous amount out there that needs to trade at some point,” she said in a recent investment outlook webinar hosted by healthcare recruitment firm Chasm Partners. She also told the Journal that elevated valuations for healthcare information technology and pharma service assets, which represented most of the private equity dollars when physician practice managers fell out of favor, could also make valuations of provider assets look more favorable.

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