James West (below), a director in the London healthcare M&A practice at Lincoln International, said there is “a huge interest" from private equity firms in medcomms agencies, “both from sector specialists and those private equity firms with little or no experience in the space”.
According to analysis by West, the pharma medcomms sector is worth more than $10bn and growing at 12 per cent a year, and a record amount of money is available to private equity firms looking to invest.
In 2020, the available capital for investment across all European private equity funds stood at a record €294bn.
West added that M&A activity in medcomms has been rising since 2019.
The number of deals being done has reached record levels, with 25 transactions across North America and Europe in 2021 to date – 19 per cent higher than 2020.
One of the highest-profile deals in recent times was the £524m sale of Huntsworth, the owner of Grayling, Red and Citigate Dewe Rogerson, to private equity firm CD&R last year.
West said investors are “attracted by the exciting growth trajectory of the medcomms sector and the likely substantial financial returns”, while “COVID-19 has driven further interest in medcomms”.
He added: “Medcomms is still a fragmented industry, so there is a wealth of opportunities to build and extend consultancy platforms through acquisitions, both in the UK and in the US.”
West told PRWeek: “Investors have so much capital to invest in high-quality agencies that we expect the market to continue at its current level of buoyancy for at least 12 to 18 months.”
However, he advised that agency owners should “tread carefully when approached by interested investors and not jump at the first opportunity”, adding that “private equity firms with little experience of medcomms will need help scoping the market to understand the most promising agencies to invest in”.
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