The orthopedic practice landscape was shaped by a record-setting number of transactions in 2022, fueled by an acceleration of add-on activity. Following the recent merger of two sponsor-owned companies (UMP and Novum), 16 active PE-backed platforms remain. However, preliminary trends point towards declining new platform investments, indicating PE sponsors are being more discerning when evaluating new opportunities in musculoskeletal care. All of the aforementioned factors squarely position the industry in the middle innings of the consolidation curve. Nevertheless, deal-making should persist in 2023 as existing platforms seek add-ons or merger partners to achieve the benefits of scale. We expect intense competition for high quality orthopedic groups, supporting attractive (albeit not peak) valuations amidst the elevated interest rate environment. As orthopedic physicians increasingly join platforms – recognizing the advantages over becoming a hospital-employed physician – a “FOMO” dynamic is causing more groups to explore options.

Read more about our key perspectives on the market dynamics, growth drivers, and valuation considerations, including recent precedent M&A transactions.