Medical Design Briefs - September 2022 - 4

Private Equity Firms Are Driving Medtech M&A Activity in 2022
M
edtech M&A volume continued at
a rapid pace in early 2022 with 17
transactions announced or completed
- outpacing the year-to-date (YTD) total
from 2021, according to a report
from Capstone Partners, a middle market
investment banking firm.
However, while medtech companies
are taking the opportunity to enhance
their portfolios and add capabilities,
the report, " Medical Device Outsourcing
Update, " indicates that private equity
buyers are " unquestionably driving
deal activity. "
" Financial buyers have accounted for
15 out of 17 2022 transactions, with several
familiar names adding onto existing
platform investments. Private equity
firms have capitalized on healthy valuations,
which has been evidenced by successful
exits of their portfolio companies, "
Capstone says.
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The analysts point to several notable
deals, including Altaris Capital Partners
sale of Paramit, a developer and manufacturer
of complex electronic medical
devices. The company sold for $1 billion
equating to ~20x EBITDA in June 2021.
" Altaris has continued to deploy capital
towards the sector, entering an agreement
to acquire Intricon in February 2022 for
an enterprise value of $221.1 million and
21.8x EBITDA. The strong valuation environment
is not only applicable to large
companies.
Dealmakers
have
noted
double -digit EBITDA multiples paid for
highly sought-after targets with less than
$10 million in EBITDA. "
Capstone notes that strong competition
for quality assets in M&A processes
has been reflected in robust valuations.
The report says that " strategics and private
equity buyers have demonstrated
their willingness to pay premiums for
quality assets. "
The report finds that supply chain disruptions,
labor constraints, and surgical
procedure delays have challenged medical
device OEMs through early 2022. It notes
that healthcare delivery organizations continue
to combat significant workforce
shortages, a key revenue driver for OEMs.
Underlying dynamics such as an aging
U.S. population, increasing prevalence
of chronic diseases, and medical
technological advancements have created
a robust backdrop of demand for the
medical device and diagnostics segments.
The stringent regulatory landscape
created a significant incentive for
OEMs to outsource device manufacturing
and commercialization to organizations
with expertise in navigating this
environment.
Sherrie Trigg
Editor and Director of Medical Content
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medtech M&A market.
Medical Design Briefs, September 2022
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Medical Design Briefs - September 2022

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