Merger and acquisition activity in the healthcare industry has remained resilient in 2010, driven in large part by the recently enacted US healthcare reform legislation. The passage of the healthcare reform act released a wave of pent up merger and acquisition activity, with the most notable increase in announced transactions coming from the hospital sector. Hospitals will likely continue to ramp up their acquisition initiatives to capture new revenue generated from expanding health insurance coverage to an additional 32 million Americans.

With the uncertainty of the healthcare reform bill now behind us, more companies are entering the market in search of acquisitions to either make up for lost revenue and/or to capture greater market share. Smaller companies, anticipating increasing pressure from the new provisions and regulations, may look to cut their losses and sell to industry consolidators. An improved economic outlook, sharply higher equity valuations, and increased lending activity should also support a healthy merger and acquisition environment during the second half of 2010.