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Strong M&A Activity Continues In Nashville For The Healthcare Industry

Since the early 70’s, Nashville has been considered a hub when it comes to the health care industry.  Nashville has developed and changed the landscape of the industry in the past 50 years.  The development of the community began with Hospital Corporation of America (HCA). Largely through hundreds of mergers, acquisitions and well as new companies, we’ve seen industry trends set in Nashville, as well as startups and spinoffs bringing different sectors of the industry to Nashville. 

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Before the Hospital Corporation of America, most hospitals were non-profit or affiliated to a religion.  In 1969, one year after inception, HCA became a publicly traded company.  This changed the landscape of the industry for good.  Through an abundance of M&A transactions, HCA now owns and operates more than 170 hospitals in 20 states across the country. In 1995, the Nashville Health Care Council was established, understanding the Nashville health care industry was responsible for $3.7bn in revenue at the time, while providing 53,000 jobs.  Today, the council reports $92bn in annual revenue generated, all while providing more than 570,000 people employed around the globe by healthcare companies based in Nashville.  There are over 900 companies that directly provide health care services, or are in some way involved in the industry.  These numbers are massive, and spurred a ripple effect around the country causing more private equity spending to focus into the industry.  This effect has led to eighteen publicly traded healthcare companies calling Nashville their home, while enticing more than $1bn in venture capital investments over the past decade.  The leaps and bounds made during the past 50 years are obvious, as the entire landscape of the industry has complete changed.  During 2006, Bain Capital, Kohlberg Kravis Roberts & Co. and Merrill Lynch completed a $33bn leveraged buy-out of HCA.  This was the largest leveraged buy-out to date and spurred an unprecedented amount of investment in the industry.  In 2011, HCA returned to the public market in the largest US private equity-backed IPO to date ($3.79bn raised).  HCA’s chain system business model was emulated by hundreds of not-for-profit hospitals throughout the country, and they are considered to be the trailblazer of the industry. 

The M&A landscape continues to change the healthcare industry to this day.  Through the first half of 2018, the healthcare sector saw deal value increase to $315bn, up from $154bn in the same period the previous year. The healthcare sector ranks third in terms of total deal value.  From a valuation perspective, healthcare M&A transactions were at an all time high in 2017.  A large driver within the space was within the senior housing and care marketplace. The number of announced transactions is on pace to set a new record, but the dollar amount of these deals will not exceed the record.  While this shows the hyperactive nature of the marketplace, these deals are occurring as smaller transactions rather than the mega-deals we’ve seen in the past.  This is a very attractive marketplace for sellers all things considered.  Private equity groups accounted for a large uptick in spending during Q4 of 2018. Financial buyers are notably optimistic about the healthcare market, with 120 total deals announced in the final quarter of 2018.  This bodes well for 2019 with 2018 in the rearview, healthcare continues to expand due to high valuations, a very large number of transactions, and an increasingly attractive marketplace. 

For the third year in a row, the number of small business transactions reached record numbers, as reported by BizBuySell.  Financial performances of the small businesses are increased year over year, as well. 49% of sellers said their businesses performed better in 2018 compared to 2017, and another 36% had similar figures comparably.  With financial performance increasing, the value of the transactions inevitably grew.  The medium asking price for small businesses in the US grew 10% from 2017, a clear indication that buyers are willing to pay more for businesses with a proven financial track record and promising futures. 

Author
Sean Ryan 
Analyst
Benchmark International
Ready to explore your exit and growth options?

T: +1 615 924 8522
E: Ryan@benchmarkcorporate.com 

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Benchmark International Facilitates the Sale of HiWAAY Information Services to 1stPoint Communications

Information Services. Since 1995 HiWAAY has provided hosting and email services, data center colocation, internet access and private network services to subscribers from its facilities in Alabama.

"The acquisition of HiWAAY’s assets builds on the success we have had with the acquisition of WebSite Source,” said Erik Levitt, 1stPoint’s CEO. “Access to retail subscribers is a very important part of our business plan. The HiWAAY name is well known in the local market and will provide us the building blocks that we need to service the marketplace in the southeastern United States, which we see as strategically important.”

1stPoint will continue to operate the HiWAAY facility in Homewood and will add the facility to its MPLS network, adding a number of private networking resources to HiWAAY’s existing products. The new services offered to HiWAAY clients will include 1stPoint’s line of collaboration tools, business texting, and more advanced hosting offerings including its virtual desktop environment. HiWAAY services, including email spam protection, will be added to other 1stPoint product offerings.

“This is a great outcome for the customers, employees, and the owners of HiWAAY,” said Jason Mohprasit, one of HiWAAY’s two owners. Mr. Mohprasit and Mr. Chris Campbell grew HiWAAY from 2010 to 2018, migrating the business from a dial-up and DSL provider into an advanced hosting provider. “We are very excited to see 1stPoint’s team take the business to the next level,” added Mr. Campbell.

Benchmark International represented HiWAAY in the transaction and was responsible for the introduction to 1stPoint.

“We are very pleased with the outcome of this transaction” said Robert West, Senior Associate at Benchmark. “The transaction went smoothly and we hope that we can work with Benchmark on future projects,” added Levitt. Benchmark provides growth and exit strategies to businesses interested in creating transformative events.

“We welcome the HiWAAY team and look forward to working with the clients and expanding our relationship with them,” added Kristen Vasicek, the Director of Marketing for 1stPoint, who was involved in the acquisition. “HiWAAY’s reputation as being an outstanding service provider with a nationwide capability but a local touch will help us continue to establish our New Way to Work strategy.”

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Something's Brewing in M&A: Craft Beer Gives New Perspective to the Industry

Who doesn’t love microbrews? The explosion of the craft-beer revolution has spread across the country.

Western cities, such as Portland, Denver, San Diego, Seattle, and Los Angeles are seeing a large increase in new jobs and establishments in small-scale breweries. This trend is spreading nationwide, and how do we explain this craft-beer boom? It’s relatively simple, the American breweries lack of distinct, indigenous brewing traditions in the past has been conducive to the rise of craft brewing. The small, independent, and traditional brewery adds to the eclectic style and diversity consumers are demanding. The niche styles of beer, particularly hoppy IPA’s, pale ales, infused blends, and specialty brews are leading the way. This changing landscape has created multiple opportunities for the M&A industry.

So, what does this craft beer boom mean to Benchmark International and the M&A industry? The sustained success of craft beer and the changing demographics of brewery ownership has led to more mergers and acquisitions and transactions than ever before. Since 2014, there has been more than one transaction per month. Global players, such as SAMMiller and InBev, are leading the way in the direct M/As of craft beers. What is more interesting in this recent trend of mergers, is the allowance of once previous competitors to combine styles and taste with new hosts to release new and creative craft beers. The rising popularity of craft beers has fueled industry growth and increased valuation multiples towards all-time highs over the last few years.

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Benchmark International expands in Tennessee

Benchmark International is delighted to announce our expansion into Nashville, Tennessee. Nashville has become a hotbed of mergers and acquisitions activity, and it is one of the fastest growing cities in the US.

Additionally, Benchmark International is growing exponentially, with four new regional offices opened domestically and internationally. So, it was only logical for Benchmark International to expand to this territory and be a part of this growing business culture.

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Benchmark International Expands Into South Africa

A Manchester-based M&A specialist has expanded into South Africa with the opening of an office in Cape Town.

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