Q4 2024 Market Update

The final quarter of 2024 capped a dynamic year for healthcare M&A, with robust activity in behavioral health, healthcare IT, and physician practice management. While transaction volumes dipped slightly from Q3, average deal size rose due to multiple sponsor-backed exits. Strong demand for healthcare services, the softening of financing and labor market pressures, and a new administration have bolstered investor confidence. These factors, combined with the most active quarter for large transactions in 18 months, signal continued M&A momentum into 2025.

Since late 2022, sponsor-backed platform recapitalizations and exits have been depressed by rising interest rates and inflation. However, Q4 2024 saw scaled platforms like GI Alliance, Retina Consultants of America, and MB2 Dental achieve premium valuations through transactions with strategic and private equity buyers. Many platforms are now poised to build on this momentum and launch sale processes in 2025.

Vertically integrated acquirers continued leading major deals this quarter, with Cardinal Health and Cencora completing multi-billion-dollar acquisitions in physician practice management. Traditional strategic buyers are also refocusing on M&A after prioritizing internal operations to stabilize margins. Provident expects the active participation of these buyer cohorts –motivated private equity investors, well-capitalized strategics, and vertically integrated acquirers –to drive both increased competition for exits in 2025 and investor interest to invest in new platforms.

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