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Pulse: medical technology report 2011 - Mergers and acquisitions - EY - Global

Pulse: medical technology report 2011

Mergers and acquisitions

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US and European M&As by type of buyer, 2000–H1 2011

US and European M&As by type of buyer, 2000–H1 2011

Source: EY, Capital IQ, Windhover and BMO Capital Markets

The appetite for medical technology assets rebounded in 2010.

A year after the market for medtech mergers and acquisitions bottomed out, M&As involving US and European medtech companies totaled nearly US$31 billion, almost double the amount seen in 2009.

Taking advantage of strong balance sheets, healthy cash flows, pent-up demand, historically low interest rates and steady valuations, buyers used acquisitions to boost revenues or diversify.

There was also evidence that more acquirers were getting back into the game after sitting on the sidelines for the better part of two years, as the number of M&As increased from 171 in 2009 to 201 in 2010. This uptick continued through the first half of 2011, when more than US$47.3 billion worth of transactions were announced.

M&As in the US and Europe, 2007–H1 2011 (US$m)

Type 2007 2008 2009 2010 H1 2011
Number of M&As 309 238 171 201 135
Total value of M&As $61,968 $30,709 $15,725 $30,624 $47,340
Average deal size $348 $274 $175 $243 $351
Number of M&As more than US$1 billion 15 6 2 7 7

Source: EY and Capital IQ
Average deal size calculated using deals with announced values.

In the longer term, an unpredictable regulatory environment, particularly in the US, increased pricing pressures, changing sales models and impending health care reforms could drive more industry consolidation.

Acquirers will likely continue to shy away from riskier, early-stage transactions in favor of deals that they perceive to have less risk — acquisitions of later-stage firms that produce revenue and, in many cases, turn a profit.

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