Expert View: A closer look at the lower middle market: who is buying?

In our weekly expert view piece, Joe Stelzer, managing partner and head of healthcare at Cavendish Corporate Finance LLP takes a closer look at buying trends within pharma's lower middle market.

With the pharma sector still in the shadow of a milestone year in M&A, talk of deals conjures up images of industry giants signing multi-billion dollar agreements to reshape the industry from the top down. Amid this understandable focus on headline transactions, the lower mid-market is often neglected. These companies are not insulated from the M&A frenzy, and a closer look at this end of the market offers insight into the trends that are shaping the future of the sector: from the product lines they are investing in, to the nature of the buyers who are financing this growth.

Current market turmoil notwithstanding, deal making is likely to sustain high levels in 2016. The troubles of equity markets may even offer a silver lining in the form of delayed rate rises, keeping a lid on financing costs for those who have acquisition targets in sight. This bodes well for mega-cap deals as in 2015, but also leaves the door open for deals involving SMEs. Indeed, as more nimble players they can often gain a foothold in emerging markets early on and profit from shifts in demand toward new geographies and treatment areas.