MEDICAL TECHNOLOGY M&A MARKET DYNAMICS
Ongoing volatility in the Medical Technology M&A sector is driving heightened diligence and investor scrutiny to ensure acquisition targets are high-quality assets capable of withstanding current market turbulence. Strategic upfront planning and the guidance of an experienced transaction advisor can help position a company for a smoother sale process and expedite the closing process.
- Cooling inflation combined with ongoing delays for a widely anticipated rate cut is creating market volatility. Investors are using lower inflation rates as rationale for a rate cut, but the Federal Reserve has yet to officially enact a cut. This uncertainty is fueling volatility as investors grapple with shifting expectations about the impact of these changes. As we move into the second half of the year, attention is turning to the presidential election and its potential effects on the economy, tax policies, and the M&A landscape. Despite the uncertainty, M&A activity remains strong for high-quality assets with solid long-term plans and stable earnings.
- In Q2 2024, Medical M&A remained strong with 128 transactions announced, bringing the total for the first half of the year to 263, slightly below 2023’s figures. The Services segment led the way with 26% of transactions, followed closely by Therapeutic Devices, Equipment, and Consumables & Disposables, which accounted for 19%, 18%, and 13% of M&A activity, respectively. Optimism remains for a strong second half of the year as the presidential election looms.
- The second quarter represented underwhelming results for the Medical Device public equity performance compared to the strong start seen in Q1. The Orthopedic index remained the top performer, up 8.8% for the year, but is trailing the S&P 500 Growth Index by more than 15 bps. The Cardiovascular and Diversified Diagnostic indexes finished the quarter with negative performance, finishing down 1.1% and 0.9%, respectively.
Medical Technology M&A Pulse – Q1 2024
Persistent inflation in Q1 2024 delayed expected rate cuts as the Federal Reserve back tracked expectations from four to three cuts this year.
Medical Technology M&A Pulse – Q4 2023
Concerns about a recession dominated economic discussions in early 2023, fueled by the Federal Reserve’s aggressive response to historically high inflation.
Medical Technology M&A Pulse – Q3 2023
Inflation, while still an economic focal point, is not the sentiment driver it was earlier in the year and in 2022.
Medical Technology M&A Pulse – Q2 2023
One year into an unprecedented cycle of interest rate increases, the task of an economic soft landing, once deemed nearly impossible, appears more and more likely.
Medical Technology M&A Pulse – Q1 2023
Q1 2023 performance was volatile, even in comparison to a challenging 2022. Companies continue to try and make sense of conflicting macro environment signals; particularly a strong U.S. consumer, paired against an ambitious and somewhat unpredictable Federal Reserve.