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November 21, 2023 | Reviewing Private Equity “Roll Ups” in the Health Care Space

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

The late, great zero interest rate era enabled the levered expansion of private equity (PE) firms, “rolling up” all manner of assets, including private businesses and professional practices.

In areas like health care, where fiduciary duty is paramount, the profit-maximizing focus of PE raises some cause for concern. A lawsuit by the US Federal Trade Commission is now bringing the business model up for review. A similar review of PE roll-ups in the finance and wealth management space is needed too. Here is a direct audio link.

Less than two months after filing a monopolization claim against a private equity-backed healthcare business that sent shockwaves through Wall Street, Lina Khan has a warning for the PE industry: there may be more coming.

The Federal Trade Commission suit filed in September alleges that US Anesthesia Partners (USAP), backed by private equity firm Welsh Carson Anderson & Stowe, snapped up a series of anesthesiology businesses across Texas and then raised prices for their services.

It was the FTC’s first action against so-called roll-up strategies — where PE firms buy up multiple businesses and then consolidate them in order to eke out efficiencies — in decades, and by filing it, the chair of the agency has taken aim at a foundational strategy of private equity.

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November 21st, 2023

Posted In: Juggling Dynamite

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