Home Private Equity Private equity bosses target Europe’s fragmented healthcare market

Private equity bosses target Europe’s fragmented healthcare market


Buyout bosses are checking into the clinic.

From fertility centres and eye surgeries to vets and therapists, general partners have embarked on a spending spree in the last year.

Their plan? To consolidate Europe’s fragmented healthcare market, hoovering up individual operators and small chains to build vast cross-border platforms.

“I’ve been covering this sector for north of 20 years, and the pace of consolidation to create these platforms now is as steep as I’ve ever seen it,” says Paul Tomasic, head of European healthcare at investment bank Houlihan Lokey.

After a lockdown-induced slump in 2020, retail health – which consists of outpatient healthcare in freestanding, commercially-owned and often branded clinic chains – returned as an investor favourite once patient volumes rebounded in 2021, according to Bain and Company.

Records in Europe were smashed last year, with deal count growing by 49% and disclosed value rising 86%.

In 2022, the deal frenzy has continued at pace: in April, US buyout giant KKR agreed to buy fertility treatment giant Ivirma in a deal that values the firm at €3bn and European investor Groupe Bruxelles Lambert said it will invest up to €1bn of equity in the acquisition of medical diagnostic services provider Affidea.

PE firms are looking to consolidate – or “roll up” – clinics so that they can operate at scale, allowing them to renegotiate prices with suppliers, launch mass-marketing campaigns, overhaul IT system overhauls and centralise operations.

“It’s a perfect sector for roll-ups,” says Alastair Brown, corporate and M&A partner at Freshfields Bruckhaus Deringer.

“You have lots of individual operators and small chains, and that gives everyone a huge opportunity to go and find targets and build a really big business.”

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Dr Franz-Robert Klingan, Bain & Company’s leader of healthcare private equity in Emea, tells Financial News sister title Private Equity News that “individual performance optimisation” is one of the key drivers in the PE clinic playbook.

“You really want the doctor to treat patients, and you want them to treat patients from 8am-6pm or whatever their regulations allow. That’s not the case in a single practice. You realise a lot of benefit from putting in an office manager that makes sure scheduling works, so slots are being used and everything is utilised well.”

Following in America’s footsteps, Europe’s retail healthcare investments typically began with dentists and vets, where a number of leading country platforms have been expanded across the continent. Now, other similarly-fragmented corners of the market are seeing a rush of new capital.


Fertility is one of the busiest sub-sectors, and KKR is among the most active investors. As well as its deal for Irvima last month, in November 2021 it acquired Generalife, one of Europe’s largest fertility clinic groups, with 30 sites across Italy, Spain, Czech Republic, Sweden and Portugal.

Luxembourg-based CVC also recently took a stake in FutureLife, a pan-European in vitro fertilisation provider.

“There is definitely a big play coming here. All the big firms see the trend of growing fertility requirements and are trying to work out how they can become a player of scale,” says Gareth Whiley, managing partner of European mid-market PE house Silverfleet Capital.

In January, Silverfleet Capital sold its stake in Care Fertility, a chain of fertility clinics in the UK, to Nordic Capital, generating a 2.6 times gross money multiple and an IRR of more than 40%.

Whiley says that underlying trends such as parents deciding to have children later in life and falling fertility counts among men support the growth of the sector. But he warns that expansion can still be risky.

“The culture of fertility means it can be all about a magic doctor who has got a great reputation. When we talk to the big firms doing consolidation globally, the thing you can export is the underlying tech and science and the processes in the lab, but it’s very difficult to scale a star doctor.

“Anecdotally, I know a number of groups who grew with multiple acquisitions that ended up with quite a lot of tension between all the people who thought they knew best.”


PE is not just spending big on fertility. Eyesight is catching the attention of buyout shops too.

“Private equity activity in vision continues to accelerate due to myriad opportunities for revenue enhancement up and down the acuity scale,” Pitchbook noted in a report published late last year.

“Numerous ophthalmology platforms created in the late 2010s should appear on the market soon, while the largest optometry groups – several of them already national in scale – must differentiate themselves in an increasingly crowded optical retail market.”

Houlihan Lokey’s Tomasic says tech developments are a major driver of investor activity in both ophthalmology and fertility. “The best example is cataract surgery. If you think about a cataract procedure by the leading providers in the UK, they have learned how to do what is a circa 10/15 min procedure really well.”


While advances in technology have boosted some corners of the clinic market, others have been buoyed by pandemic-related surges in demand. Soaring consumer spending on pets in the past two years has prompted more buyouts of vet chains, for example.

The latest sign of appetite came this month when TPG and Clayton, Dubilier & Rice made an offer to take private US pet-care company Covetrus.

Europe’s vet sector has also seen a flurry of PE interest. In early 2021, Silverlake and Nestlé purchased part of EQT’s stake in Independent Vetcare, a large UK-based practice group that operates in 12 European countries, for $4.2bn. In September, CVC bought one of the UK’s biggest vet clinics chains, Medivet, from mid-market house Inflexion for more than £1bn. Weeks later, EQT teamed up with Hellman & Friedman to buy German online pet supplies retailer Zooplus in a €3.7bn deal.

“Valuations have picked up very significantly,” Jean-Baptiste Wautier, partner at BC Partners, told Private Equity News late last year. “Investors have realised the long-term attractiveness of the pet space – combining growth, resilience, digital potential as well as being poised for consolidation.”

Mental health

Mental health clinics are also seeing pandemic-related spikes in investor interest, with lockdowns prompting a rise in demand for services around anxiety and loneliness.

“Since Covid, the need has gone through the roof,” Kevin Taggart, managing partner at mergers-and-acquisitions firm Mertz Taggart, recently told The Wall Street Journal. “Every mental-health company we are working for is busy. A lot of them have wait lists.”

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The Priory, a London clinic famed for treating celebrities struggling with addiction, was sold in late 2020 to Dutch PE house Waterland for more than £1bn.

Investors also spent $5.5bn on mental-health tech startups globally last year, up 139% from 2020, according to a report by analytics firm CB Insights.

Health risks

Looking ahead, there are a swathe of other nascent clinic markets where PE bosses and bankers expect to see more activity in the coming years. Dermatology, physiotherapy and radiology are among them.
But although deal opportunities are aplenty, so too are the risks. Regulation differs across borders and understanding the political mood in each country is key, dealmakers say.

Another problem is the shortage of labour. The problem is particularly acute in England, which has a very low proportion of doctors relative to the population in comparison to other European nations, according to the British Medical Association.

Another question buyout shops will face is how to exit such investments.

“You won’t be able to keep flipping things to private equity as you have done multiple times,” says Houlihan Lokey’s Tomasic. He says initial public offerings (IPO) are likely to become a more popular route.

As PE firms swoop on more clinics, the likelihood is that more of them will look to create broad healthcare platforms covering a range of clinical fields that could appeal to capital markets.

Tomasic adds: “Going to the equity markets with a business that has dental clinics, vets, and is a good overall clinic operator – that’s where I think the industry ultimately goes.”

This article was published by Financial News sister title Private Equity News

To contact the author of this story with feedback or news, email Sebastian McCarthy

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