When the owners of such businesses decide whether or not to sell, they should understand that buyers do not hold all the cards in this industry's sales game. Many smaller medical device companies are facing a capital squeeze, lacking the money they need to develop products and getting turned down by public and private capital sources alike. Meanwhile, many large public medical device companies continue to enjoy good earnings, high valuations, and relatively cheap capital with which to make acquisitions. But smaller medical device companies continue to hold considerable strategic value for larger firms, and they should be aware that opportunities are available and owners are walking away happy with their selling prices. Includes only transactions completed or definitively agreed to in 1998.
Several transactions are double-coded for more than one industry segment.
It is also helpful to partner with an expert who can manage the sales process and ensure that the company obtains the best price. Medical device product development is typically a long, difficult, and expensive proposition. If a larger company can buy a smaller company to gain product innovations instead of building this capacity in-house, it may gain a significant strategic advantage. Larger companies also need smaller companies for scale. Finally, larger companies that are publicly traded must continue to show growth to their bottom line in order to keep their shareholders happy.