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Berkery Noyes Releases 2009 Pharma and Healthcare Information Merger & Acquisition Trends

Tuesday, February 09, 2010

Revenue multiples in the Pharma and Healthcare Information Technology market experienced a significant half-to-half gain as exhibited by the 81% increase in the median enterprise value/revenue multiple from 1.1 in 1st Half 2009 to 2.0 in 2nd Half 2009. This rise brings the median enterprise value/revenue multiple within 76% of its peak in 1st Half 2008.

2nd Half 2009 exhibited an increase in both aggregate volume and aggregate value, versus 1st Half 2009. Half-to-half, aggregate value increased 150% from approximately $2 billion to $5 billion, and aggregate volume increased by 15% from 86 deals to 99. The 2nd Half 2009 level of activity, as measured by aggregate value and aggregate volume, is on par with 2nd Half 2007, and slightly below the peak of activity in 1st Half 2008.

For the full year 2009, The Pharma and Healthcare Information and Technology market exhibited negative growth with declines in both aggregate value and aggregate volume of transactions. Total transaction volume declined by 12% from 209 deals in 2008 to184 in 2009. Aggregate value declined by 16% from $9.43 billion in 2008 to $7.89 billion in 2009.

The largest transaction in the Pharma and Healthcare Information and Technology market in 2009, and going back to 2007, was TPG Capital and CPP Investment Board’s proposed acquisition of IMS Health, Inc. (NYSE: RX) for $4.01 billion, announced on November 5th.

Please note that for evaluating aggregate transaction values, value represents total consideration paid by acquirer. For multiples Berkery Noyes uses enterprise values (EV) that normalize values where less than 100% of a company is being acquired or has net debt.