Last Friday 12 November 2010 I read the analysis item “Sluggish medical device sector ripe for mergers” on Reuters and a more elaborate version of that article on Yahoo. The articles signal a significant pickup in M&A activity in the medical devices industry in 2010 as a result of big companies in pharma and devices being on the prowl for acquisition targets to broaden their portfolios and take advantage of undervaluation of smaller medical devices companies.
According to a recent Ernst & Young report the deals seem to relatively big during the first half of 2010, with 89 deals valued at $16.9 billion struck in the U.S. and Europe in the first half of 2010, compared with 172 transactions worth $15.7 billion in 2009. Ernst & Young does not expect the deals to remain this big and rather move to more mid-size. In the mean time I see lots of smaller medical devices deals take place, but these usually do not make for big news.
Selling a medical device company requires thinking things through and a good plan. Especially smaller and middle size medical devices companies often do not have the resources to be supported by an investment bank that runs the entire process for them, nor do they always have in-house experience on how to run an M&A deal. Some time ago I drafted a presentation with guidance for a small to medium-sized medical devices company that wants to sell itself to a bigger company. This presentation may also be useful for business unit of a bigger medical devices company seeking to acquire a smaller medical devices company. It does not purport to be comprehensive, but it will you a rough outline of the steps and important items from a legal / regulatory perspective in an M&A deal in the medical devices industry.