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Margin for Error in M&A Deals Is 'Shrinking'

Analysis  |  By Jay Asser  
   February 05, 2024

Bain & Company's report reveals where healthcare transactions are trending in 2024.

Healthcare dealmaking is showing little sign of slowing down in the face of economic and regulatory headwinds, but those challenges are forcing organizations to make moves with greater purpose.

There is less margin for error in M&A deals, creating more pressure on transactions to show value, according to Bain & Company’s M&A 2024 report. As such, leaders must improve their dealmaking strategy in 2024 by reevaluating their portfolio and target lists, while being willing to invest in new technology.

In the year ahead, four out of five executives surveyed (80%) said they expect they will do as many or more deals than they did in 2023. Divestitures will be the focus for many, with three out of five M&A practitioners in healthcare and life sciences (60%) saying that they are evaluating assets to divest.

The report notes that as more effort is put into reducing government spending, healthcare needs to be wary about future revenue. Regulatory scrutiny is also widening, potentially leading to delays in deals in closing.

“We have seen more companies spend the year focusing on ways to improve their M&A capabilities,” Bain & Co. wrote. “The margin for error has shrunk for getting the anticipated return for any M&A in healthcare and life sciences.”

Healthcare, unlike many other industries, experienced an increase in 2023 deal value. However, much of that was driven by pharma and biotech’s deal value, which experienced a 73% jump. Medtech, meanwhile, saw an uptick of 36%.

M&A volume in payer, provider, and healthcare services remained relatively low and that is expected to continue in 2024. Bain & Co. anticipate payers pursuing moves for scale or to deliver care at a lower cost, with regional providers seeking out deals for scale in primary care, home health, and facility care.

The report stated it also expects the pharma industry to utilize its $171 billion cash on hand by searching for innovative assets in traditional areas like oncology and rare diseases, as well as in new areas like weight loss.

For medtech, growth in technology, innovation, and category leadership is expected to be at the forefront in coming transactions.

Jay Asser is the contributing editor for strategy at HealthLeaders. 


In pursuing M&A, executives across healthcare should consider how deals demonstrate value in uncertain financial times, a report by Bain & Company states.

Most executives surveyed (80%) plan to do as many or more deals this year as they did in 2023, with 60% evaluating assets to divest.

Leaders need to rethink their approach to dealmaking by assessing their portfolio and list of targets, as well as invest in disruptive technology to stay ahead of competitors.

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