Private Equity in Healthcare: Legal Challenges and Best Practices for 2025 with Andrew Bab

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Apr 3, 2025

Andrew Bab, Partner & Co-Chair of the Healthcare Group at Debevoise & Plimpton LLP, shares his expertise in healthcare M&A. He discusses the rapidly evolving regulatory landscape impacting private equity, highlighting state-level regulations and the implications of reverse CFIUS. Bab also delves into the complexities of Contingent Value Rights in pharma deals and how new HSR rules are reshaping auction timelines. Political scrutiny and the need for buyer-led strategies in healthcare M&A are key themes, offering vital insights for industry professionals.

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INSIGHT

Key Regulatory Changes

Regulatory changes like antitrust, cross-border regulations (CFIUS, sanctions), and DEI programs are key considerations.
Focus on compliance and potential risks when acquiring companies, especially concerning DEI and outbound investments (reverse CFIUS).

INSIGHT

Delaware Law Changes

Delaware court decisions questioned common shareholder agreement provisions, impacting veto rights and activist settlements.
Subsequent amendments to Delaware law restored prior practices, addressing concerns about board responsibilities and potentially deterring companies from leaving Delaware.

INSIGHT

State Intervention in Healthcare

Growing state intervention in healthcare M&A is evident through new statutes in California, Massachusetts, and other states.
These regulations empower regulators to review deals, assess cost, quality, and access to care, and potentially delay or block transactions.

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Andrew Bab, Partner & Co-Chair of the Healthcare Group at Debevoise & Plimpton LLP

In this episode of M&A Science, Andrew Bab joins Kison Patel live in New York to dive into the fast-changing legal landscape facing private equity deals in healthcare. From emerging state-level regulations and reverse CFIUS to FDA policy shifts and CVR litigation, Andrew offers a masterclass in legal diligence and deal structuring. They also explore how political scrutiny and increasing regulatory complexity are driving the need for more proactive, buyer-led approaches in healthcare M&A.

Things you will learn:

How state-level regulation is changing the game for healthcare deals
What private equity needs to know about DEI rollbacks and False Claims Act liability
Impacts of recent Delaware case law and why some firms are leaving the state
When to use CVRs in pharma M&A and the litigation risks they carry
How new HSR rules and antitrust dynamics are shifting auction timelines

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Episode Timestamps:

[00:01:30] Andrew’s background and overview of Debevoise & Plimpton’s healthcare practice

[00:03:00] Regulatory updates: DEI rollbacks, reverse CFIUS, foreign direct investment

[00:05:30] National security laws expanding into tech, steel, and social media

[00:06:00] Antitrust enforcement differences between Trump and Biden administrations

[00:09:00] Delaware case law: MFW, Molus, Crispo and corporate governance implications

[00:15:00] State-level regulation of healthcare deals (e.g., CA OHCA, MA law)

[00:18:30] FDA’s AI guidance and post-Chevron court deference

[00:21:00] CVRs in pharma: structuring, litigation risk, and buyer incentives

[00:29:00] Put/call deal structures for PE–strategic healthcare partnerships

[00:32:30] HSR form overhaul and implications for auction vs. proprietary deals

[00:34:30] Increased scrutiny of PE under False Claims Act and integration risk

[00:44:00] Political scrutiny of PE in healthcare and rising public pressure

[00:47:00] “Craziest M&A moment” – Mercury in the House of Orion delays closing