Matt Wolf
speaker
221 appearances
14 recordings
2 series
first heard Jan 2025
last heard Jun 2025
Matt Wolf’s voice in public audio — every appearance, attributed to the second.
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Some people, at least leaders, sort of intuitively understand this. But just to see this absolute explosion in the number of suppliers and customers that companies are working with now compared to 2005, again, as much as a nine times increase, depending on how you want to slice it. I think really kind of drives home this incredibly complex operating environment that we're all working to navigate.
And that's what we're watching.
Yeah, I mean, it's fascinating. I completely agree. And the other element of this is now business decisions change. We're seeing clients, we're seeing operating teams, operating partners, management executives more closely manage those solutions, their technology stack, their vendor relationships. Can we trim the number of vendors, the number of solutions? How does that streamline our operations?
But there's so many second and third order or second and third sort of derivative almost decisions that are impacts that go along with that, right? So, okay, if we reduce the number of vendors we're using in our technology stack, that probably has positive implications for our risk management, internal audit, our risk management framework, right? We're, you know, we're
fewer entrance points to kind of manage. Maybe on the supply side, hey, we're reducing our number of vendors, reducing number of SKUs, but what if one of them goes bankrupt or one of them has supply issues? Where do we want to pay for redundancies? Where do we want to accept additional risk and have additional point solutions and have additional suppliers? What does that look like?
It's made that analysis more complex. And then on the customer side, I think everybody would say, every operator, every CEO, every leader would say, oh, yeah, we have some difficult customers. We have some difficult clients that just don't make sense for us. They're off strategy. We really shouldn't devote resources there. But you know, push comes to shove.
And if the goal is to keep dollars coming in the door, it takes a special sort of culture and leadership and frankly, an investment to say, no, despite the potential short-term pain, we are exiting this segment. We are exiting this business. We are, you know, separating from these clients. It's a very difficult thing to execute on, even if we, we know and we, um, we view it.
The other element of the study that's been going on that I think is also really interesting is the sort of capital per employee. We looked at Russell 2000 companies, excluding financials and real estate. And what is sort of the capex per employee? And that has increased significantly as well. 2,940 grand per employee 2024, almost $330,000 per employee.
We've seen sales per employee increase as well, well above GDP growth. So we're seeing investments in productivity. We're seeing these investments in complexity. to generate those returns. But the whole decision space around how do we manage this complexity, even if we know it's a problem, it's still a very complex problem to navigate in its own right. So it kind of makes your head spin, really.
But at least we sort of know where we stand, hopefully.
Thanks, Scott. Matt Wolf. I lead the healthcare and private equity group for RSM. RSM is really the largest consulting firm focused on the middle market. I help lead our healthcare space there. And I'm also one of our healthcare senior analysts.
So I spend a lot of my time working with our economists and other analysts to study what's going on in the macroeconomic environment and what's going on in healthcare and putting together our data-driven perspective on that to share with our clients or people serving our clients and really anybody who will listen to me. So excited for the conversation today.
Yeah, I mean, a lot of the same as Bart and Holly, and I'll add some numbers to it, right? Because I get asked all the times, I'm sure my colleagues on the panel do, of what do you think deal volume is going to be this year? What's it going to be next year? What is that going to look like? And I'm really more interested in the shape of it and what it looks like and what are we going to have?
And it's specifically a distinction between deals in providers, companies that take reimbursement risk, and don't, right? We're seeing this shift away, as Holly sort of alluded to and mentioned, of sponsors wanting to still invest in healthcare, but not in reimbursement risk. Right now, according to Bloomberg data, we have about $250 billion of dry powder in healthcare buyout funds in the U.S.
These funds, you know, they'll invest in other industries too, but a stated interest in healthcare. They're raising another $140 billion of healthcare buyout funds over the next handful of years. And to Bart's point earlier, now we, according to some pitch book data I was looking at, 55% of private equity-backed healthcare providers have a five-year or longer hold period from their lead sponsor.
So there's going to need to be a changeover. We've seen since the Fed started lowering rates in September that the actual private credit financing rates to get a deal done hasn't changed. The 10-year, 20-year has increased since September. The interest rates are not going to come down. The multiples are not going to go up.
These will be transacted, and we've seen in a lot of conversations I've had, deals we've seen of sponsors moving from provider deals, but they want to stay in healthcare, investing into health technology, healthcare services, healthcare consulting firms. They want a piece of that pie, but not the direct reimbursement risk. watching that shift, I think will be really interesting.
And I think it'll create buying opportunities for sponsors that remain committed to a healthcare reimbursement risk. And they have the operating, the deal teams to really execute on that because it's, it's a difficult thing to do and it's only going to become more complicated, but we'll see sponsors really specialize in it. And I think they'll be able to make some good deals.
Absolutely. Absolutely. And every day we see fewer and fewer holdouts that are expecting that 2021 multiple on their exit. There's still some out there, but it's a new environment. It's a new regime. Craig, a couple of the core trends that you're watching currently.
Yeah, I completely agree. And I'm hearing the same right from my perspective, my clients as part of the thing I would add to is that, you know, we kind of saw this story during the last administration. And there was a, you know, would be a bevy of executive orders or pronouncements or whatever people would really say. work hard to understand, internalize, try to react to them.
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