Not For Profit Healthcare M&A
Does anyone have insight into the NFP Healthcare M&A market? I recognize these health systems are covered by public finance bankers, but I'm particularly interested in the M&A side of the business. I have a few questions outlined below:
- Which banks are the major players in the M&A market? Which banks are strong in the financing market?
- What are fees like in the M&A space? Are they similar to their corporate counterparts?
- Is the deal process very different from a corporate M&A deal? What valuation metrics are predominately seen?
- Is WLB more similar to other public finance groups or corporate groups?
- Why has M&A activity increased in the space recently?
- Does the M&A ever involve For-Profit to Non-Profit conversions or vice-versa?
- What key trends has the sector seen post-COVID?
- What are some marquee deals in the sector?
Any insight would be appreciated!
My understanding is GS and Jefferies (the ex-Citi team) are the most active in M&A. I believe JPM is strong in financing.
I’m in Public Finance (not in HC though) and our HC bankers work higher hours than most in our department. Can’t speak too much on the rest of the questions.
Thanks. Do you know if the GS & Jefferies teams compete directly with the smaller banks that were mentioned below? Or are they focused on different sized transactions?
Kaufman Hall and Juniper Advisory work with a lot of non-for-profit health systems.
I’ve always been curious if exits to leadership positions at a non-for-profit health system are available from a group that covers them? Most C-Suite / VPs easily clear 1M+, very cushy career.
Thanks! Will have to do some more research on the firms you mentioned. Exit-wise, I've heard some go and work at a health system, while others stay in finance (i.e. Healthcare IB/PE) or move to a for-profit healthcare company in general. I'd be curious to know more as well.
Know Ziegler, HJ Sims, Stifel all players in the space
Do you know what size health systems they bank? Good to know smaller firms are active in the space as well.
OP here. Following up on this, I'd be interested to know the advisors for Kaiser Permanate & Geisinger or the Henry Ford & Ascension Michigan deals that were completed in 2023.
Not entirely sure but maybe Cain? They have an internal banking team that works with just hospital / health system financing. At least that was the understanding I got from one of their associates I know.
Thanks. I've heard of them being respected in the space. Do you know if they compete with the BBs for the largest deals?
No, strictly middle market deals from my understanding.
bump
Not for Profit work is literally like being back office among back offices. You're like the Operations division's Admin team. Pond scum.
*Spits on you*
I work for one of the firms mentioned and have done M&A work for many health systems. GS did the Kaiser/Risant deal acquiring Geisinger as well as the Ascension/Henry Ford deal. GS does only a few deals but all large cap ones. Kaufman Hall is doing Summa sale to General Catalyst, they did Nuvance sale to Northwell, they do many large cap and by far the most deals overall. Juniper does many of the smaller deals, selling 1-2 hospitals to larger systems. JPM is the leader in public finance but does not do M&A. The only IB that does both M&A advisory and cap markets is GS. Citi also had a group and most folks went to Jefferies last year.
I can chime in a bit here from the Public Finance angle. GS hands down owns the top end of the M&A market with the Jefferies (ex-Citi) team being the only other major player. One of the Jefferies co-heads was at GS before making the switch to the Citi (now Jefferies) side. RBC also plays in the advisory space, though focuses on smaller, buy side mandates for NFPs and doesn't look to compete with GS and Jefferies in the advisory space.
MS has played in the space in the past and I know they want to re-enter the advisory business as part of their departments strategy shift. JPM is the top NFP HC financing team on the street, but isn't a player in advisory. GS has struggled mightily in financing in recent years. From a financing angle, the Jefferies team had a couple bad years in a row at Citi before moving, which may explain why only ~60% of the team moved that way.
I thought Kaufman was a consulting shop - they do advisory work too?
Thanks for sharing this info
Yes they do a lot of M&A for health systems. On their website they have tombstones for Summa/General Catalyst, Nuvance/Northwell, BJC/St Luke's and a bunch of the other notable recent health system deals. I believe an ex-GS VP runs that team.
Hi there, ex-Citi NFP Healthcare here. I worked on the team that is now at Jefferies. Now onto bigger and better things that work well for me.
Wanted to share the following:
So the new Jefferies team is at-large in the M&A space (it’s a strategic priority for those bankers), but they will still be doing financing work (lower margin, but still valuable). They really want strategic to be a focus, but that’s takes time and resources…and it’s unclear if they’re going to be able to fully achieve that. It is important to note that not all former Citi strategic and financing clients will follow the Jefferies bankers, no matter the strength of the relationships. They have a lot to contend with, JPM/BofA for Financing mainly, but also Morgan Stanley, Barclays, and RBC. Others like Ramirez, Hilltop, Loop, SWS, and Raymond James are also very hungry. GS has always been focused more on strategic work than financing, but they do the occasional financing deal. Also, Citi still has some NFP HC M&A muscle- left behind by the split from Public Finance. So don’t be surprised if they’re still an advisor on some deals in the near-future.
Also beware KHA. The power of Kaufman Hall really cannot be down-played in the advisory space or in NFP HC IB in general. They’re very consolidated, they have great relationships, and they are a part of the ecosystem that cannot be ignored by the banks.
I think the other questions have already been answered here, so I just wanted to share this insight. I’ll answer what else I can below:
Great comment! Where do most people exit to from the space?
So it depends on the person, and it depends on what they like most about the job- financing, advisory, or management. If you like financing, probably DCM, ECM, credit rating agency/research, or Commercial Banking and/or their related functions. If you like the advisory function, then probably consulting, financial advising, or something on the buy-side. If you like management, then maybe working for a system or hospital in their business development or financial functions.
Thanks for the info - is there anyway we could connect? I would love to learn more about your experience.
Non-profit? Sounds like a tax scheme.
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