Mergers and acquisitions (M&A) in the medtech sector showed strong activity throughout 2024, with notable participation from private equity (PE) firms and strategic companies alike. Industry leaders such as Stryker and mid-sized players like Merit Medical completed several deals, while many PE firms narrowed their focus on healthcare investments.
The trend is expected to gain momentum in 2025, driven by favorable market conditions and falling interest rates. Sellers in medtech who aim to secure optimal outcomes must understand the unique approaches of PE firms and corporate buyers to maximize their value.
Strategic Buyers: Innovation and Operational Synergies Drive Demand
1. Pursuit of disruptive technologies
Corporate buyers often acquire to gain access to innovative solutions that enhance their product portfolio or facilitate entry into untapped markets. Highlighting proven commercial potential and aligning innovations with a buyer’s goals can significantly enhance a seller’s valuation.
2. Creating operational efficiencies
Acquisitions that deliver clear market or operational synergies are particularly appealing to Fortune 500 companies. Sellers can boost their appeal by showcasing how integration will strengthen competitive positioning, expand market access, and deliver economies of scale.
PE Buyers: Focus on Scalability and Recurring Revenues
1. Building larger entities
PE firms favor buy-and-build strategies, consolidating smaller players to create scalable enterprises. Companies that can demonstrate the potential to integrate seamlessly with others are particularly attractive to these investors.
2. Recurring revenue models
Medtech businesses offering high margins and predictable revenue streams stand out to PE investors. Sellers can drive valuations by emphasizing metrics such as customer retention rates, subscription growth, and sustainable profit margins.
Key Considerations for Sellers in 2025
- Preparation matters: Establish strong financial health, ensure compliance, and craft a compelling growth narrative to attract buyers.
- Articulate value: Positioning the business with clear synergies and opportunities for integration can secure higher valuations.
The medtech M&A landscape in 2025 offers an exciting opportunity for companies ready to capitalize on heightened demand. Sellers that align their strengths with the priorities of either PE firms or strategic buyers will be well-positioned for success in this dynamic market.
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