The ‘big three’ of B&R’s new advisors are in for their own set of challenges
In the latest batch of deals, it looks like the “big three” of healthcare transaction advisors (B&.
R) may be getting a bit too big.
The Wall Street Journal reports that several of the top three B&amt advisors—B&amr Advisors, C&.;Co, and E&rg. Advisors—are likely to see their share prices decline by as much as 20%, and may not be able to stay in business long enough to generate long-term revenue growth.
“This is a very big deal,” said one of the report’s authors, Daniel Hsu, who specializes in investment banking and corporate governance at Boston University.
“These three firms, these are the guys that make up the big three.
And this is going to be a huge, huge problem.”
The report says that the three B &rs are now likely to have about $7.5 billion in annual revenue, or a 30% loss, after the initial round of financing.
That’s a pretty big loss for these firms.
According to the WSJ, they are expected to make an additional $1.5 million in quarterly earnings, which is a big hit to their bottom line.
“The big three have been growing a lot faster than other healthcare firms, but this will be a big loss to their business,” said Hsu.
“They’ll be able only to pay out about $1 billion, and that’s not even counting the $1 million that they lost in the acquisition of Bioware.”
The WSJ notes that B&ammr has a long history of being one of “the big three,” which is to say that the company has been in the business of selling and providing services for healthcare firms for decades.
The WSJB cites a 2013 analysis of B &amr’s revenue and earnings from a company called Biowares that found that the healthcare company “provides financial advice to more than 5,400 healthcare organizations worldwide.”
And according to the report, “it’s likely that the B&ams’ acquisition of BioWare, BioWare’s most profitable game, will raise more questions than it answers about whether the acquisition is good for the company.”
Hsu says that, like other healthcare companies, B&aR’s current portfolio of advisers may have to be diversified if it is going “to survive.”
“They have been doing well at the expense of the rest of the industry,” he said.
“And so this is a real threat to the healthcare industry.
This is a really bad deal for B&angr.”