MedTech Matchmaker – 5 Deal Ideas for 2023

February 14, 2023

The past two years have seen a surge in MedTech M&A activity, with 2021 and 2022 ranking as the #1 and #2 years, respectively, for overall transactions in our database going back to 2006. A total of 29 >$100M deals were announced across the sector last year involving >$33B in up-front consideration. This represents the second highest number of transactions we’ve seen over the past 16 years (behind only 2021) and the fourth most capital the group has committed to acquisitions in a single year. We’ve seen this trend carry over into 2023, with enough deals announced year to date across the sector to break the 2021 record if the current pace holds.

The busy dealmaking environment has come despite a challenging macro landscape, as volatile procedure volumes, ramping inflationary pressures, increased cost of capital, and fragile supply chains have given MedTech executives plenty of internal stumbling blocks to overcome even as they keep an eye out for external opportunities. While shifting macro conditions have made the past couple of years highly unusual from a business perspective, many of the M&A themes we’ve previously talked about continued, including a preference for private companies as targets and trend toward smaller deal sizes overall. The latter point was true despite Johnson & Johnson’s $18B acquisition of Abiomed, which marked the third straight year in which we’ve seen a >$10B transaction consummated after no mega-deals were announced across the sector in 2018 or 2019. With macro conditions for medical device companies now as favorable as they’ve been since the pandemic began (see our recent MedTech Macro Index report), small-cap valuations having reset substantially, and IPO activity still depressed, we see a fertile environment for continued M&A.

So in the spirit of Valentine’s Day, Chris Pasquale and team played matchmaker and analyzed five hypothetical pairings they believe make sense from a strategic perspective. This marks the sixth edition of the MedTech Matchmaker, with 6 Matchmaker alumni acquired (out of 17 unique targets proposed) since Chris began this annual thought exercise back in 2018.

For more information on the pairings and Nephron Research please email: info@nephronresearch.com