Colleagues and clients left last week’s J.P. Morgan Healthcare Conference with a renewed sense of optimism and energy. Neill Jakobe, Vice Chairman of Ropes & Gray, sat down with Deirdre Bolton to discuss his outlook for the healthcare and life sciences deal environment. Neill anticipates a more stable backdrop for dealmaking, driven by expected interest rate cuts and accelerating momentum in artificial intelligence. He notes that sponsors are facing a significant backlog of portfolio company exits and increasing liquidity needs. Creative solutions—such as continuation vehicles and a more liquid secondaries market—are poised to help unlock activity in the year ahead.

Key insights from the video include -

Optimism and increased stability are returning to healthcare dealmaking, driven by factors such as interest rate cuts and advancements in artificial intelligence.
AI is playing a significant role in shaping the future of healthcare transactions, offering new advantages and opportunities for value creation.
The healthcare sector is adapting to a complex reimbursement environment, with stakeholders seeking clarity on regulatory changes and future policy directions.
Private equity in healthcare is experiencing longer hold times and a growing backlog of portfolio companies, leading to increased demand for liquidity and innovative deal structures, such as secondaries and continuation vehicles.
The convergence of AI, creative dealmaking, and evolving market dynamics positions the healthcare industry for substantial growth and transformation, while also introducing new risks and opportunities for investors and dealmakers.

Watch Neill’s full interview for his optimistic perspective on what’s next.

Transcript

Deirdre Bolton: We're here with Neill Jakobe, he is the vice chairman of Ropes & Gray, a preeminent global law firm. Neill, it's great to see you. So, what's the tone like here at the J.P. Morgan Healthcare Conference?

Neill Jakobe: I would say the tone is very optimistic and energized. I feel like we've been through quite a bit over the last year—quite a bit of disruption. I feel like our clients are starting to internalize that and have a sense of a more stable environment for dealmaking going forward. Between that, the interest rate cuts, and the advantages of AI, I'm seeing a lot more optimism than I have in a few years here.

Deirdre Bolton: So, with that optimism, what is your favorite part of being part of this great ecosystem here in healthcare and biosciences?

Neill Jakobe: Yes, so I'm a reformed investment banker. I was at Morgan Stanley for a couple of years earlier in my career, and I have to say, I love being a connector. I love finding business executives or founders who are looking for a good partner—somebody who will be a good operational and also personality fit—and bringing those people together. It's something that I get a real charge out of. And that, at the end of the day, is the secret to capital deployment. You find people who will be good partners, who will be able to work well together, be able to create more value, and ultimately, hopefully, better healthcare outcomes.

Deirdre Bolton: Better healthcare outcomes and optimism. I'm interested in the challenges that you're also helping your clients solve. What are the biggest problems that they are bringing and laying at your feet right now?

Neill Jakobe: Well, it depends on the client. I would say in pure-play healthcare, in the provider space, it's trying to make sense of this reimbursement environment—where it's going. There is now a better sense of what the key tenets of that are going to be. And so, some of it is a little tea-leaf reading where we're talking about what has already changed and then where we think this is going given the priorities of this administration. But I think that's starting to come into better focus.

Deirdre Bolton: Neill, you have more than 20 years in leadership roles. Does this set of circumstances—does this environment—remind you of any other one?

Neill Jakobe: It really doesn't. I would say that the long timeline for selling portfolio companies—the backlog with sponsor portfolio companies—reminds me of the Great Financial Crisis and how long it took to work through that. But the fact is there are so many more private equity firms now. Last I saw, there are about 19,000 private equity portfolio companies being held, with an average hold time of six to seven years, which is longer than they would like to be holding them. So, you look at that backlog and that need for liquidity. You look at the implications of AI. You look at the creative deal structures that we're seeing—the secondaries market—where you've got a pretty liquid secondaries market for private equity transactions now, for LPs to sell their stakes, and GP-led secondaries like continuation vehicles. I think that we have a unique set of factors that position us well for growth next year. I think there's a lot of opportunity, there's also a lot of risk, and that's kind of prime time for dealmakers.

Deirdre Bolton: Prime time for dealmakers with the right advice. Neill, thank you very much. Neill Jakobe joining us there—vice chairman, Ropes & Gray.