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TheStreet Open House

Quick Take: More Health Care M&A on the Way

NEW YORK ( TheStreet) -- As stocks rebound and the economy appears to be improving, are M&A prospects improving as well? Gerald Adolph, senior partner at Booz & Company, provides his thoughts on the matter to TheStreet's Gregg Greenberg.

Although some sectors have been more active than others, one that has been constantly making headlines this year is health care.

According to Adolf, the desire to acquire biotech companies is large, because an acquisition can increase the number of products in a company's pipeline and help lower costs. Because of this, the deals should continue to flow for quite some time.

Hospital companies likely will also see consolidation. Adolph said that with increased IT spending and squeezed margins, there will be "a lot of hospitals changing hands -- probably one thousand."

Shifting focus a bit, the financial sector has been relatively quiet in terms of acquisitions. Large companies find themselves too large to take on other companies, and there is a lot of uncertainty in the industry.

Although the economy is improving, uncertainty never bodes well for acquisitions.

However, private equity has quietly moved back into making acquisitions. Although it's not with the quick-flip theme we might recently recall.

Adolph said these companies are back to their old ways of buy-and-hold and actually fixing the companies, rather than buying them, gutting them and flipping them for a quick buck. This in turn, will obviously show less volume than in prior years.

-- Written by Bret Kenwell in Petoskey, Mich. .

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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