January 28, 2015

Healthcare Consulting Momentum Continues with Huron Consulting’s $325 million announced acquisition of Studer Group

Following up what was a breakout year for Healthcare Consulting M&A in 2014, 2015 starts out with a bang. Huron Consulting stepped way out of its traditional comfort zone to spend nearly ¼ of its market capitalization to announce it is acquiring JMI backed Studer Group. Studer is a provider-side focused consulting and training firm and commanded a reported 4.3x revenue multiple and 12.5x EBITDA. Clearly, Studer had extraordinary EBITDA margins but the revenue multiple is eye popping from Huron Consulting, that traditionally trades at 1.5-2x revenue. This deal is indicative of what we have seen in the dynamic healthcare consulting segment. In 2014 Clearsight advised on the sale of Frankel Group to Huron Consulting, Simpler to Truven Healthcare Analytics and ECG to Gryphon Investors. The strategic Healthcare consulting oriented firms providing true operational and strategic insights continue to garner premium valuations. We expect this trend to continue in 2015 with both Life Sciences and Provider side firms. While the Big Four have been actively looking in this space, they have yet to transact, so we would not be surprised if the next big deal in the Healthcare Consulting space involves one of them. Values are at all time highs but there are still more buyers than there are high quality, growing firms, so we don’t expect any downward pressure on values.