The State of Medtech M&A

Prolific mergers and acquisitions activity in 2007 yields to a more uncertain climate in 2008.

The year 2007 ended amid uncertain economic conditions, precipitated by the subprime and structured-loan debacles. The tightening credit situation will affect leveraged transactions such as private equity deals most immediately, as lenders and principals will require a higher burden of proof before permitting a deal to move forward. But the impact of the credit squeeze will extend well beyond private equity deals to affect the overall interconnected world economy. Although the aphorism that healthcare is recession-proof still applies, prospects for a particular sector, company, or deal must be evaluated according to their specific circumstances.

In general, 2007 mergers and acquisitions activity in the diagnostics and medical device industries reflected complementary moves in which acquirers sought businesses that dovetail with their core product lines and infrastructure, as opposed to acquisitions driven by the need for diversification. Many acquirers looked to purchase platforms, technologies, and organizations that address markets expected to grow significantly in the future. Particularly hot sectors include diagnostics, orthopedics, spinal and cardiovascular products, and home-care devices, among others. Read More.