What We See as We Look Forward Into 2024
Paul looks back at the challenges of 2023, including a drop in transactions, and explains why easing inflation, stable rates, and new acquirers mean PT business owners should start preparing for 2024 now.
Full transcript
Generated from the episode audio and lightly edited for readability.
Hello, this is Paul Martin, founder and president of Martin Healthcare Advisors, and I want to welcome all of you to our final episode in 2023 of the Martin Rehab M&A advisory. You know what I want to discuss today is how this industry has navigated itself through 202423 and what we collectively now need to begin to focus on to make sure we have a successful 2024. It has literally been as you all know a year of significant challenges but also some significant triumphs for many of you out there.
And I'm excited to share some of the insights on what we have seen and what we are looking to help you and guide you in moving forward for 2024. You know, again, we've had a number of challenges this year, ongoing effects of COVID, staff shortages, rising inflation, and all of this has tested our resilience. And on the acquirer side, the increased cost of capital has also added to these hurdles and it has created a very complex landscape for both acquirers as well as sellers, those out there looking for a partner to actually navigate.
You know, as you look at some of the impacts that this has had and you look at the number of transactions has almost been cut 50% as compared to transactions that we saw in 2022, 50% down in 2023. But I'm here to tell you there are acquirers out there that are hungry for great deals. And so if that's going to be you, we need to start preparing now. You know again one of the things that this industry and what acquirers are looking for from companies like you is the resilience that we have.
You know many businesses that we are talking to out there and that we have worked with have not only survived some of these challenges but have actually seen significant growth and development especially in the back half of 2023. And again this is a testament to our collective and I like to think of us on this call on this on this talk today as you know our collective strengths have given us an ability to adapt under pressure and yes we were under some significant pressure in 2023.
So let's start looking ahead now to 2024. First of all we know it's not going to be without challenges. Things will come up. Be prepared. Expect change. But I really believe that some of the experiences and some of the lessons that we have learned going all the way back to COVID and now what we've learned going through difficult economic times, difficult industry dynamics through 24 thou two through 2023 has really prepared us well to meet and overcome any obstacles that we may face in 2024. The good news going into 2024 is that inflation is decreasing, interest rates have stabilized, and this combined with private equities readiness to invest.
Remember, a lot of private equity groups, you know, took a little bit of a step back in 2023. In fact, we saw 50% less deals in 2023 than we saw in 21 and 22. So, I think this is a time and in our discussions with acquirers, they're ready to go. They're looking for good, prepared deals going into 2024. So, what I also think we're going to see is a wave of new acquirers coming into the rehab industry. We have had numerous calls over the last three months on private equity groups, companies that are looking to make major investments in this industry.
And you know, as we look at that and you know, contrast that with the legacy acquirers that are in this industry, it should be a very interesting battle over who's going to get the best deals in this industry. Will it be the new acquirers or will it be some of the legacy acquirers? And I think for you out there, you need to make sure that you are having an opportunity to discuss and talk to both of those on both sides of that equation. You know, our firm specifically, and I and I'm talking about this mainly to just give you an idea of what kind of volumes we see that are going to be coming out in 2024.
We're going to be bringing five really strong new deals into the market in January and February of 2024. These are all companies that have been working extremely hard with our preparatory consultants and have significantly improved their value. Some over doubling the value that they started with u months ago. So these are companies that are fully prepared for an extremely successful outcome in 2024. In conclusion, you know, again, this industry stands, I believe, on the cusp of a huge 2024. Believe me, it's going to be busy.
Again, new acquirers, a lot of companies that failed to get out in 2023 because of their own performance or because of some skepticism due to acquires, high interest rates, etc. But I think all that will now culminate in a phenomenal 2024 in the rehab, merger, and acquisition market. And I challenge all of you or any of you out there that don't feel as though you are prepared, please give us a call. We can do an assessment very quickly with your company and point to very specific things that you can do and how that will impact your value and what this market's going to look like in 2024 in terms of the entire acquire world out there that we have.
Again, a lot of new acquirers, a lot of the legacy acquirers, and they're all looking to get on the same starting line and see who wins in 2024. If you would like to discuss any of the things that we talked about today, just click below and let's talk. Thanks and have a great New Year's.
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