NHCC Panelists Discuss Investment Opportunities
On May 22, the Nashville Health Care Council hosted a panel discussion on private equity investment trends and strategies within the healthcare industry. More than 300 members attended the afternoon event at the Loews Vanderbilt Plaza to learn more about the state of the market, M&A activity, and the outlook for funding the growth of Nashville's $92 billion healthcare industry.
Tom Wylly, senior partner at Brentwood Capital Advisors, moderated the distinguished panel, which 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.
The panel started off 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 gotten off to a slower start in the first quarter, much like 2018, he said he expects it will return to 2018 levels over the course of the year. The panelists generally agreed, and all expect to see valuable market opportunities this year.
It was noted that many investment firms are approaching deals with younger companies, strengthening the existing management teams at those companies, and developing three- to five-year plans focusing on sales and growth. Panelists said both short-term and long-term value creation, as well as company culture, talent, hiring and collaboration, are key components of the acquisition strategy.
Additionally, panelists shared insights on sub-industries within healthcare that are on the rise. DeParle spoke of Consonance Capital's interest in behavioral health and hospice, and Ishbia discussed Shore Capital's interest in exploring the opioid addiction treatment space, preventive medicine, animal health, orthodontics, women's health, IVF and FDA compliance, and consulting.
Crisan shared an observation on healthcare 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 his firm has an interest in companies deploying technology that can improve processes.
When identifying companies with which to partner, 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."
Wylly chimed in saying, "Many companies treat capital raise as a transaction versus the beginning of a relationship. Focus secondarily on price and terms, and instead shift the attention on culture, business objectives, and decision-making that results in fruitful relationships and trust building."
While the panelists represented firms from across the country, all have deep knowledge and ties to Nashville's healthcare ecosystem. Each panelist agreed the city has unique strengths. With two Nashville companies having already gone live with IPOs this year - Change Healthcare and Smile Direct Club - each panelist expressed considerable optimism for this year and years to come.
"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 added. "The people here are what make the difference."