Dermatology saw its first private equity investment in 2011, activity which sparked a decade-long wave of wide-spread, national consolidation in the space. With the early days of consolidation behind us and over 30 active PE backed platforms operating in the space, recent activity has seen consolidators coming together or recapitalizing for the next wave of growth. Most recently, Water’s Edge and Riverchase merged to form Aqua Dermatology, and Platinum and West Dermatology came together as well. Additionally, Forefront, Pinnacle, Epiphany, and Dermatologists of Central States (“DOCS”), some of the largest groups in the market, went through majority recapitalizations, while Schweiger Dermatology successfully closed a minority recapitalization.
The activity we’re currently seeing despite the state of the capital markets indicates continued, accelerated activity, specifically in terms of add-on acquisitions by strategic acquirers (PGP advised on a large dermatology transaction already this year and expects to close two more before year end). At the same time, existing sponsor backed groups continue to evaluate transacting – PGP is aware of two in the market that will soon do so to continue growth.
While dermatology has seen widespread activity, the recent trajectory has led to multiple proven, successful platforms with fresh pools of capital aimed at capturing the significant opportunity that still exists in dermatology as groups compete for key assets and market share.
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