Last week, the Nashville Health Care Council hosted an informative panel discussion on private equity investment within the health care industry. Panelists included Jeffrey R. Crisan, Managing Partner, Silversmith Capital Partners; Nancy-Ann DeParle, Partner, Consonance Capital; Justin Ishbia, Managing Partner, Shore Capital; and Casey West, Managing Partner, SSM Partners. Tom Wylly, Senior Partner at Brentwood Capital Advisors moderated the panel. More than 300 Council members attended to learn about the state of the market, M&A activity, and the outlook for funding the growth of Nashville’s $92 billion health care industry.
View event photos on Flickr.
(c) 2019, Donn Jones
The panel began with a discussion of trends in deal activity for new acquisitions. Crisan began with an observation about market similarities between 2018 and 2019, noting the macroeconomic factors are consistent across both years. While 2019 has started off slow, he expects that it will return to 2018 levels over the course of the year. The panelists generally agreed and all expect to see valuable opportunities this year.
Many investment firms are approaching deals with younger companies, strengthening the existing management teams at those companies, and developing three- to five-year plans that focus on sales and growth. Panelists noted that value creation, both short- and long-term, as well as company culture, talent, hiring and collaboration, are key components of the acquisition strategy.
In addition to acquisition strategy, panelists shared sub-industries within health care that are on the rise. DeParle spoke of Consonance Capital’s interest in behavioral health and hospice, and Ishbia explained how Shore Capital is exploring the opioid addiction treatment space and preventive medicine, animal health, orthodontics, women’s health, IVF and FDA compliance, and consulting.
Crisan shared an observation in one subsector of health care IT by stating, “There’s been an evolution in the data and analytics market. Data and analytics is no longer just early stage companies. In fact, we have invested in three data and analytics companies that have achieved profitability.” West added a focus on long government sponsored care and interest in companies with technology that can improve processes.
When identifying companies to partner with, panelists agreed on two critical prerequisites: company culture and sector knowledge. “To me, sector knowledge is important because it allows you to develop relationships without having to explain something multiple times,” DeParle said. “You want to look for people who understand a basic knowledge of the industry.”
All of the investment firms represented on the panel are based outside of Nashville, but have deep ties and investments in the city’s health care ecosystem. Each panelist agreed that Nashville has unique strengths, and expressed optimism for its continued growth.
“I think Nashville is on a run that will continue for the next 20 or 30 years,” West said. “What sets Nashville apart is the talent,” Ishbia said. “The people here are what make the difference.”