Houlihan Lokey poached 2 healthcare dealmakers from RBC Capital Markets in London as the investment bank gears up for a wave of M&A in the sector

  • Houlihan Lokey is Wall Street’s top restructuring bank, but also has a strong healthcare practice.
  • The group is staffing up, making several key hires to buttress its European healthcare team.
  • Houlihan has hired Paul Tomasic and Andrew Murray-Lyon from RBC Capital Markets in London.
  • See more stories on Insider’s business page.

Houlihan Lokey has poached two new dealmakers away from RBC Capital Markets’ healthcare team in London, as the firm looks to expand its healthcare investment-banking footprint in Europe.

Effective this month, Paul Tomasic has joined Houlihan Lokey as a new managing director and head of European healthcare. Andrew Murray-Lyon has joined as a director in Houlihan’s healthcare investment-banking business.

Houlihan also announced three more additions to its European healthcare team: Federico Pavia Ghione, an associate, and Owen Richards and Zofia Duffy, both financial analysts. 

“What excites me is to be surrounded by a team where the whole DNA of the organization is about leading the mid-market,” Tomasic told Insider in an exclusive interview. “Everybody is fully aligned with a real entrepreneurial spirit to dominate the mid-market sector with a high-quality advisory focus.”

Tomasic’s first day at Houlihan was April 1. The new recruits are a sign that financial services is readying itself for a wave of healthcare-related M&A activity as medical breakthroughs provide hope of defeating the coronavirus pandemic. 

And while Houlihan excels at helping clients with bankruptcy and distressed debt, advising on the most restructuring deals globally amongst banks in 2020, according to Refinitiv, it’s M&A where the firm sees opportunity in healthcare. 

Europe is a market that’s ripe for healthcare consolidation, Tomasic believes. One reason is that the continent’s patchwork public health systems have given rise to a fragmented landscape of disparate providers.

“On a relative basis, Europe is at an earlier stage in its consolidation within the healthcare technology sector,” Tomasic added. “Frankly, we see that as a massive opportunity for us as a mid-market player in that space.”

Houlihan Lokey’s growth spurt

Mark Francis, a Houlihan Lokey MD based in Dallas who leads the global healthcare division, has been busy stitching together a worldwide team over the past several years.

“Paul and I started getting to know each other about 19 months ago,” Francis told Insider. “We have a great friendship and partnership now, and we’re excited to work with Paul and Andrew.”

“They absolutely fit culturally with us, are well-respected advisors across Europe, they have deep industry content and relationships,” Francis, a veteran of the firm since 1997, added.

His team typically handles about 25 to 30 deals per year. In 2020, despite the tumult that the pandemic wrought on global M&A last year, Francis’ team still advised on 22 deals.

One example of a recent transaction it served on was the sale of Physical Rehabilitation Network to the lower-middle market private equity firm Silver Oak Services Partners in December for an undisclosed amount.  

Another was its work on the sale of St. Croix Hospite — a network of hospice care facilities in central states including Illinois, Kansas, and Minnesota — to H.I.G. Advantage, a private-equity fund that invests in the middle market, in a deal that was announced in October for an undisclosed amount. 

Globally, the healthcare group now comprises more than 50 individuals. It’s been built up through a series of key appointments poached from rival healthcare advisory firms, too.

In September of 2020, Houlihan recruited Keith Barry and Allan Burton from Wells Fargo Securities to join the bank’s healthcare group out of San Francisco. Barry became Houlihan’s new head of medical technology, and Burton joined as a vice president.

And one year earlier, Houlihan brought Jerome Brown and Austin Smith from JMP Securities to join the firm’s healthcare team out of New York. Brown was named a managing director, and Smith a VP, in October 2019. 

Houlihan, which was founded in the early 1970’s, has become Wall Street’s go-to counselor for distressed companies facing quagmires like bankruptcies and over-leveraging. 

The firm’s fiscal year runs from the beginning of April to the end of the following March. For 2020, the bank’s corporate finance revenues for the nine-month period ending December 31 were more than $502 million, the company said in an earnings report in January. 

The data firm Dealogic ranked the Houlihan 35th among global investment banks in terms of yearly revenue.

Today, Houlihan counts about 230 bankers in Europe, a company representative said. In the region, the firm has increased its banker headcount by 50% over the past three years. 

The global healthcare sector saw strong recovery in the second half of 2020

To be sure, restructuring does impact the healthcare sector, too. Houlihan’s healthcare group has handled more than 50 restructurings over the past two decades, Francis said. 

Francis said the difficulties companies experienced in 2020 translated to some restructuring work for his division last year.

“There are occasions where companies need our assistance, but it is a smaller part of the equation from a healthcare perspective relative to M&A and capital markets,” he said. 

Meanwhile, M&A activity in the healthcare space, which was already strong prior to the pandemic, has built up more momentum as a result of the coronavirus. 

“Generally speaking, healthcare has been a pretty healthy and attractive market with lots of capital formation and capital support,” Francis added.

In 2020, there were 788 healthcare deals that were announced in which the merger target was based in Europe, according to data from Dealogic. That’s an increase from 2019’s 712 deals in Europe, and 2018’s 706 deals.

Those deals amount to a decent chunk of the global healthcare M&A market.

Overall, 2020 saw some $403 billion worth of healthcare M&A worldwide, Dealogic found, across 3,320 deals. Deals in which the target was based in Europe generated some $50 billion.

The year before, 2019, saw $591 billion worth of global healthcare M&A, spread across slightly fewer deals: 3,178. Deals with European targets accounted for $73 billion, Dealogic found.

And 2021 is off to a running start. So far in the first quarter of the year, there have been 796 healthcare M&A deals globally, according to Dealogic, with 189 of those based in Europe.

European deals have already produced $39 billion worth of deal values, and globally, the sector has seen $148.7 billion in commercial activity.

Identifying future opportunities

As Tomasic steps into his new role leading Houlihan’s European healthcare business, one of his key focuses will be tapping into the energy and interest that the sector is drawing from the world of private equity. 

“We’re seeing a proliferation of mid-market funds, including US ones that are looking to be more global in their aspirations of activity,” Tomasic said.

Meanwhile, global healthcare is becoming intertwined with other industries like finance. Fintech has been saturating the space as providers recognize the need to build out more sophisticated payments systems.

That’s not all. Access to healthcare providers during the pandemic has been given a major boost by remote telehealth services, many of which target the behavioral healthcare sector.

More providers than ever have been meeting their clients virtually, and many experts predict growing demand as the pandemic leaves in its wake a trail of mental health challenges.

“What you have in Europe now, even on the behavioral health side, is quite a number of interesting technologies and platforms that are growing,” Tomasic said. 

Francis agreed. “The pandemic really has created more potential mental health issues, and the delivery of these services has been greatly enhanced by digital and telehealth technology,” he said.

“Mental health providers are looking to build new specialties, geographies, and density, so they can provide holistic services to patients.”

Going forward, Tomasic and his team will keep close watch of those sectors as they look for new opportunities to get deals done in Europe.

“We’re ambitious to build this,” Tomasic said of the burgeoning European healthcare business. “Mark and I would say this is step one in that European journey. We are looking to continue to grow this business over time to make it a really, really big success.”

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