The healthcare sector is well-known for constantly evolving, with continuous technological advances, regulatory changes and growing demand for quality products and services. In this dynamic scenario, M&A transactions have emerged as one of the main strategies for companies to expand their market presence, gain valuable synergies and obtain access to new technologies.
However, due to the complex nature of the healthcare sector (particularly the strict regulations and sensitive ethical issues), a careful and strategic approach becomes key to ensuring the success of M&A transactions. It is in this context that corporate governance plays a key role, safely and efficiently guiding M&A transactions in a challenging environment.
Corporate governance comprises a set of principles, policies and practices aimed at guaranteeing the proper management of companies. By promoting transparency, social and environmental responsibility and ensuring fair/balanced treatment of all stakeholders, corporate governance contributes to the strength and success of organisations.
In Europe, the Corporate Sustainability Reporting Directive (CSRD) exemplifies the movement towards more transparent and responsible practices. This directive requires companies to disclose information about how their operations impact the environment and society. As well as enhancing transparency, the CSRD guides investment decisions, encouraging business practices that promote environmental, social and governance (ESG) aspects.
This trend is not limited to Europe and it is on the rise in Brazil as well. Brazilian companies — particularly those with international presence or seeking to attract foreign investment — are increasingly adopting ESG practices to align themselves with international standards and improve their competitiveness in the global market.
One of the most common ways of adopting – and validating – these practices is by obtaining certifications. Initiatives such as B Corp, which certifies companies that meet high standards of social and environmental performance, responsibility and transparency, have become increasingly relevant. These initiatives assess companies across various areas, including governance, impact on employees, customers, the community and the environment. In this case, certification is granted by a non-profit organisation (B Lab), with the aim of providing external, independent and impartial validation of the practices adopted by the target company. Other certifications – such as ISO 14001 (related to environmental preservation), ISO 16001 (linked to social responsibility) and the Great Place to Work certification (which notably measures the well-being of the company's staff) have also been increasingly sought after.
The benefits of adhering to consistent ESG practices are not limited to reputational benefits. Tangible financial returns can also be achieved in the long term. Investors who prioritise ESG criteria are more likely to invest in companies that demonstrate a clear commitment to sustainability and social responsibility.
In Brazil, there are legislative initiatives underway that propose ESG even as a tie-breaking criterion in public bids, signalling a shift towards more conscious and responsible practices in the Brazilian corporate environment.
In this context, it is important to bear in mind that although the benefits of corporate governance are universal, the healthcare sector presents specific challenges that require particular attention during M&A transactions.
One of the main challenges in the sector is regulatory complexity. The healthcare industry is highly regulated, with a wide range of laws, standards and requirements that directly impact on companies' operations. Compliance with the Brazilian General Data Protection Law (Law No. 13,709 - LGPD) and the standards of the Brazilian Health Surveillance Agency (ANVISA) standards are crucial in the healthcare sector in Brazil.
Robust corporate governance plays a key role in managing this complex environment, ensuring compliance with laws and standards and reducing regulatory risks.
It is therefore essential not only for operational due diligence to verify the governance of the target company, but also for the purchaser to implement a strong governance structure for supervising risks and ensuring post-acquisition compliance. This may include specific committees responsible for ongoing monitoring, in order to mitigate risks and guarantee adherence to regulations throughout the transition period.
In addition, companies in the healthcare sector usually handle sensitive patient data and must remain vigilant to ethical and compliance issues related to data protection, privacy and the confidentiality of information. Robust data protection and privacy policies, aligned with the LGPD and other relevant regulations, are fundamental to ensuring information security and stakeholder trust.
Maintaining transparent and continuous communication with all stakeholders during the M&A process is crucial to addressing concerns, reinforcing trust and demonstrating a commitment to ethics and responsibility.
Another crucial aspect is the focus on the quality of patient care, which must be prioritised in any healthcare M&A transaction. Corporate governance ensures that the quality of care is maintained — or even improved — throughout the transaction or integration process, safeguarding patient well-being and the long-term sustainability of the business.
To achieve this, it is necessary to develop a detailed integration plan that addresses all operational areas — including clinical and patient care processes — as well as implement continuous post-transaction monitoring and evaluation mechanisms to ensure that the objectives of the transaction are being met.
In summary, corporate governance is fundamental to the success of M&A deals, especially in the healthcare sector. By adopting robust governance practices, companies can not only mitigate risks, but also generate sustainable value and ensure the continuity and quality of the healthcare services provided. In a highly regulated and sensitive environment such as healthcare, attention to governance can be the determining factor between the success and failure of a transaction.