Pandemic Shaping the Playing Field for Physician Group Acquisitions

Throughout the pandemic, private equity and strategic acquirers’ appetites for well-performing physician groups across a number of specialties have been resilient.  On the other side of the equation, physician groups that had desired to remain independent are now seeing the benefits of being part of a larger organization as they work to manage significant declines in patient volumes and related operational challenges attributable to COVID-19.  It’s reasonable to infer that as some groups start to emerge from the crisis, they will begin to explore partnerships with private equity-backed platforms seeking shelter from future storms.  This bodes well for both groups, as private equity platforms can add leading practices to their rolls, and physicians can benefit from increased scale, robust back-office services, and enhanced payor contracts.  Across the board, we foresee large waves of consolidation of independent groups and sponsor-backed platforms under the auspice of “we’re better positioned to address future challenges and on-going pandemic fallout together.”

One trend we expect to gain momentum will be commercial payors’ efforts to use the pandemic to drive consolidation of physician groups as part of the race to vertically integrate, provide more coordinated care, and narrow networks.  As an example, integrated payor / provider groups like United Healthcare’s Optum Division have been increasingly aggressive in their pursuit of physician group acquisitions, as well as technology-driven care models like those acquired in the purchase of remote behavioral health provider– AbleTo for $470mm.  We also think there is a meaningful play for sponsors interested in building out more integrated models, which can extend the continuum of care, improve outcomes, and reduce overall healthcare expenditures.   Enhanced Healthcare Partner’s recent combination of a surgicalist group and physician compensation services group to form EA-Synergy is a prime example of how value can be generated by providing more coordinated services to health systems.

Based on conversations with the sponsor community, we expect the first wave of pandemic-driven physician group M&A activity will largely consist of add-on acquisitions in specialties where private equity has already invested, specifically: dermatology, vision services, orthopedics, GI, dental,  physical therapy, and women’s health.  There is also meaningful interest in ENT practices, and interestingly, in some traditionally hospital-based specialties like cardiovascular care.  However, we think new, large sponsor-backed provider platforms will be the exception and opposed to the rule for now.

Timing around the launch of new deals is a frequent topic of discussion.  Many well-capitalized businesses may opt to sit on the sidelines through the summer to see how the response to the pandemic unfolds and how the M&A market responds in kind.  However, for other groups, the relative lag in deal flow could place their process in the spotlight as opposed to competing for attention during headier times.  For those groups willing to dip a toe in the water, after seeing patient volumes swing back, a process launch in the late summer will give their advisors two or three months of “new normal” performance from which to baseline financial projections for the remainder of the year.  In this light, one could expect to see deals coming out beginning in Q3 2020. Pertaining to most things in life, timing is everything. There’s no right answer to the question of “when should I test the market,” but the demographic tailwinds which made physician groups compelling investments prior to the pandemic have not changed, and in fact may be amplified by pent-up demand that has been building for healthcare services over the past three months.

We continue to closely monitor the market for healthcare services businesses and remain optimistic that there will be attractive opportunities for well-run provider groups now and in the future.  To the extent that you would be interested in having further conversations on this topic, or others related to our healthcare services capabilities, please do not hesitate to contact members of the MHT Partners healthcare services team: Taylor Curtis ( or Alex Sauter (

What is Social Impact Investment Banking?

To some, the terms “Social Impact” and “Investment Banking” may appear to conflict with one another. After all, aren’t investment bankers supposed to be “win-at-all-costs” dealmakers?

Well, like most things in life, it isn’t quite so black and white. The job of an investment banker is to facilitate transactions that achieve clients’ goals. In the past, that often meant focusing largely on one thing: maximizing value. Today, however, financial results are not the only measure of a successful business. To a growing cohort of entrepreneurs, business owners, and investors, companies that value the social impact of their operations are growing in influence and importance. As a result, partnering with an investment banker that can elevate the social or environmental impact of clients, while at the same time optimizing financial outcomes, is critical for a company vested in the impact of its business.

Given our expertise and deep experience with socially invested companies and “ESG” (environmental, social, and governance) investing, MHT Partners has launched a focused initiative to advise social impact and double bottom-line companies and investors as part of a Social Impact M&A Advisory program.

In recent years, impact and ESG investing has grown significantly, driving demand as investors look to partner with high-performing, impact-driven companies. The Global Impact Investing Network estimates that impact-specific assets under management (“AUM”) grew at an annual rate of 17% between 2014 and 2018. In the U.S., MHT Partners estimates that private equity impact investment AUM exceeds $30 billion[1]. Many of the largest and longest-standing financial sponsors are deploying impact funds, including KKR, which in February closed its $1.3 billion Global Impact Fund, and Bain Capital, which is currently raising its second fund under Bain Capital Double Impact. The growing community of impact investors and companies is creating a dynamic new market.

The growth in impact investing is not surprising, as there is ample evidence to suggest that companies that value social impact experience outsized returns and rates of growth. For years many marquee investors, often spurred on by powerful limited partners, have divested of interests in the munitions and fossil fuel industries. Now, real-world evidence from the Carlyle Group supports the case that socially conscious practices, such as increased board diversity and the incorporation of renewables into energy portfolios, yield more favorable economic outcomes for companies. Through the first four months of 2020 and the COVID-19 crisis, ESG funds have drawn more than $12.2 billion of capital and outperformed the market according to the Wall Street Journal. Impact investing is here to stay.

As investment bankers in the middle market, we seek to align ourselves with clients who share our values. The history of our firm reveals a long track record of advising high-performing companies in the consumer, healthcare, technology, and education segments that value social or ESG, as well as financial, outcomes. Our frequent dialogue with the most active and experienced funds that have an expressed mandate to invest in companies with a positive social impact gives us unique insight into the differentiating factors that are coveted by impact investors. We believe that companies that value social impact are poised to experience outsized growth in today’s economy, and we are excited to formalize our deep experience by moving forward as a leader for providing Social Impact M&A Advisory services.

If you would like to learn more about MHT’s Social Impact M&A Advisory practice, please e-mail Alex Sauter (

[1] Excludes real asset strategies

What Will Become of the Sharing Economy?

We had (and still have) “excess capacity” in personal assets – everything from office space to cars to restaurants to boats to houses to bikes…even apparel. It is physically impossible to use all of our “stuff” 100% of the time, and conversely, it is often inefficient to purchase all of these assets when you can’t afford them, can’t store them, or just want to use something once. Enter an explosion of entrepreneurs and their apps that virtually connected intermittent demand with intermittent supply. The sharing economy was born, and until a few months ago, society had developed a feeling of accomplishment (wasting less, saving money) while billions of dollars were being generated by property owners and app developers. Further, the sharing economy includes the “gig economy,” which shares all of the same network effects previously described. However gigs are personal and professional services performed remotely (e.g., legal services, graphic design) or in person (TaskRabbit, Uber, NetJets,, etc.). The gig economy contributed to a dynamic transformation in our society, as millions of workers around the world pieced together multiple occupations, often lifestyle-oriented, to generate a desired level of income.

And then came the COVID-19 global pandemic in late 2019 and early 2020. The unprecedented shelter-in-place rules have had a crippling impact on the sharing economy, as much of the sharing economy depended on the transportation, hospitality, entertainment, and office space demand of people. Said another way, much of the sharing economy relies upon close human contact.

Perhaps the most notable impacted networks, so far, are Uber, Lyft, and Airbnb. The two dominant ride-sharing companies had not been publicly traded for a year when global ride-sharing demand evaporated in Q1. Millions of self-employed drivers around the world, and nearly 8,000 total full-time employees, are out of work. Airbnb was slated to go public this year and instead has laid off 1,900 employees and taken on $2bn of expensive debt. For some lucky drivers, the spike in grocery, parcel, and meal delivery has softened the blow.

The bottom line is that most of us are still not comfortable being in close contact with shared “stuff” without a sanitary guarantee. My family’s next trip was to involve an Uber ride to the airport, cross country flight, Turo car rental, Airbnb lake house rental, and probably peer-to-peer boat and bike rentals. Everything has been cancelled.

When will we, as frequent sharing economy customers, be comfortable with these arrangements again? When will the millions of drivers, property owners, office owners, dress owners, etc., find a proven and affordable disinfecting solution that we can all swear by? How will a customer receive validation that a bike or cubicle or car was properly sanitized? When a vaccine is rolled out, will we as customers need to prove our vaccination or is it the other way around?

As consumer investment bankers, we are keenly interested in how the evolution of the sharing economy will continue as COVID 19 continues to impact the world. To discuss this and any other consumer topics, please don’t hesitate to reach out to us.