Will the healthcare M&A musical chairs continue?
M&A activity in the healthcare sector has declined this year, as has consolidation among healthcare marketing companies. So says Claudine Cohen, senior industry observer, managing director and head of CohnReznick’s Transactions and Turnaround Advisory practice.
In the few years leading up to the COVID-19 pandemic, M&A activity in the healthcare sector was robust and as such signaled that valuations for the sector were high. However, according to a recent report by KPMG, M&A deals in the healthcare sector decreased by 34% between the fourth quarter of 2021 and the first quarter of 2022.
And just like health care, so are its marketing ventures.
Asked to assess the healthcare marketing space, Cohen said there has been a cooling two years into the pandemic.
The outbreak, which initially caused widespread uproar, has spurred corporate consolidation. Many health marketing veterans who had survived previous recessions, she noted, opted to sell their business — to exit while the obtainment was still good, so to speak.
While there has been recent M&A activity in the healthcare sector, Cohen said there hasn’t been as much consolidation on the marketing side compared to a year ago.
“Much of the momentum that healthcare marketing has had as a result of COVID may have come down to a more or less normalized level,” she explained.
The trend lines for the rest of the year may not be clear, but a disconcerting dynamic now faces the industry: what if consolidation picks up again? And what will that mean for small or medium-sized agencies looking to stay independent?
As COVID becomes rampant, a cloud of uncertainty is rising, Cohen noted. This should translate into a more stable market over the next 12-24 months.
His advice to small businesses that want to stay independent is to focus on specialty offerings that set them apart from the competition. Instead of being everything to everyone, these companies might be better off emphasizing their perceived value and cementing their relationships with established customers.
“You have to find the areas where you can add value and differentiate yourself,” she said.
Looking ahead, Cohen said the influx of stimulus money to healthcare organizations saved bottom lines from pandemic damage — but also put marketers in a tough spot.
While not all healthcare marketing is seen as a discretionary expense — especially after the volatility in the macro economy over the past few years — Cohen said brands are likely to be much more deliberate in executing their marketing plans. expenses.
Cohen also suggested that multi-year projects that previously had organizational support could be put on the back burner in favor of more pressing priorities.