You’ve likely been reading about the continued high levels of activity in medtech mergers & acquisitions (M&A) in 2021. A week rarely goes by without an acquisition announcement or two.
Since the pandemic, there’s been a lot of discussion regarding whether this is a good time to sell a medtech company. While every business situation is unique, there’s no doubt this is a great time to consider options. Some possible scenarios:
1. Early-stage companies: Whether you have revenue or not, if you’re an early stage company that has proven you have a scalable model, it might be the right time to consider a partnership with a strategic industry player. Being considered scalable could include any of the following:
- Proven revenue model which demonstrates salability of products
- Major market regulatory clearance (FDA, CE, China, or Japan)
- Clinical evidence demonstrating efficacy of your products and a clinical use case that validates usability/ acceptance by clinical end-users
- Reimbursement model to drive adoption in a major market country
There haven’t been many better times for early-stage companies to explore strategic options. Many industry strategics and smaller companies that have seen their products in high demand are flush with cash due to the pandemic and are looking to invest in their portfolio. Others are seeking strategic innovation to differentiate themselves going forward. Either way, these companies are looking for you.
2. Middle market medtech* company owner who wants to continue to control the company and take money off the table
- Sell a minority stake in the company
- Sell a majority stake
Private equity (PE) companies have so much dry powder (funds available to spend) that they are getting more creative in finding ways to invest. They’re more open than ever to deals where they invest in the current management (as a minority or majority owner) without necessarily taking control of the company. An owner can get an investment and still run the company (within certain mutually agreed parameters), and the owner can retire some initial risk and move some of the equity into liquid funds.
3. Middle market medtech* company owner who wants to sell and move on:
- Sell a majority of the company
- Sell the entire company
Similar to the discussion for item 2, this is a great time for any medtech company owner interested in selling their company to explore options to best maximize their value as they seek to either retire or move on to another business opportunity.
Whether you’re an early-stage company or a middle market company seeking to sell all (or a portion of) your company, it’s a great time to evaluate your next steps to maximize your value moving forward. The best first step is to speak with an industry M&A professional, make a strategic plan, and then execute to deliver value to you and your fellow stakeholders.