Ten Trends and Best Practices with Today’s Medtech M&A

In performing valuations for medtech companies, I have seen the process get more sophisticated, but also take longer. Over the last year, dealmakers have been reporting that M&A processes are lengthier. From the first data exchange to closing the deal, respondents to a recent survey point to new types of risk evaluations, profound demands on the organization, and more cautious diligence¹—all of which contribute to long deal cycles.

Why This Is Important

In the same survey, 45% of respondents stated that an average deal can now take six months to finish, from NDA to final signatures.¹ Why are M&A processes taking longer? For example, in an environment where bid/ask spreads remain wide (the difference between the highest price the buyer is willing to pay for the asset and the lowest price a seller is willing to take), much of the holdup seems to stem from sluggish price discovery and lengthy early-stage negotiations. 

For decades, M&A has been one of the most important strategic growth mechanisms in the medtech industry. As healthcare systems demand innovation, digital transformation accelerates, and investors seek growth in high-value therapeutic areas, medtech companies increasingly turn to acquisitions to expand capabilities, enter new markets, and acquire differentiated technologies.

After a slow period following the pandemic, medtech M&A activity has rebounded significantly. Deloitte reports the sector entered a period of renewed dealmaking in 2024 and 2025, driven by strong corporate balance sheets, portfolio optimization initiatives, and demand for innovation in cardiovascular care, diagnostics, connected devices, and AI-enabled healthcare technologies. Medtech and diagnostics transactions reached approximately $78 billion in deal value in 2025, while diagnostics represented roughly $42 billion of transaction activity.² At the same time, private equity firms have re-entered the sector aggressively, attracted by favorable valuations and significant amounts of undeployed capital.

However, the history of M&A is also a history of unrealized expectations. Numerous studies have found that between 50% and 70% of acquisitions fail to achieve their original value creation objectives. The primary causes are rarely financial modeling errors. Instead, they stem from inadequate due diligence regarding technology, clinical evidence, regulatory exposure, quality systems, cybersecurity, reimbursement, and post-merger integration.

Trend #1: Increased Focus on AI and Digital Health Assets

One of the most significant shifts in medtech M&A is the growing importance of AI and software platforms. According to Deloitte, traditional medtech companies are increasingly using acquisitions to obtain capabilities in AI, connected care, remote patient monitoring, predictive analytics, digital therapeutics, and clinical decision support systems.² The challenge for acquirers is that AI assets require a fundamentally different diligence process from that of traditional hardware devices.

Key diligence questions include:

• What proprietary datasets support the algorithms?
• How diverse and representative are the training datasets?
• What evidence demonstrates model performance?
• How frequently are models retrained?
• What controls exist for model drift?
• How will future regulatory changes affect commercialization?

This means evaluating not only the product itself but also the architecture, data governance framework, software lifecycle processes, and cybersecurity posture.

Trend #2: Quality Systems Are Becoming a Valuation Driver

Quality systems are no longer viewed simply as compliance requirements. Increasingly, they are recognized as indicators of organizational maturity and operational scalability.

Acquirers routinely evaluate ISO 13485 compliance, design controls, CAPA effectiveness, complaint management, supplier controls, risk management processes, FDA inspection history, and weak quality systems that can materially reduce valuation.

A target company with recurring FDA observations, unresolved CAPAs, or poor documentation practices often faces purchase price reductions, escrow requirements, or delayed transaction timelines by as much as 20%.³

Conversely, companies with mature quality systems frequently command premium valuations because they reduce execution risk after acquisition. For engineering leaders, diligence readiness increasingly means maintaining a continuously audit-ready organization.

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Trend #3: Clinical Evidence Has Become a Competitive Asset

Historically, many device acquisitions were based on technology potential. Today, buyers increasingly demand clinical evidence. The most valuable medtech assets demonstrate improved patient outcomes, reduced complications, higher hospital utilization, economic value for providers, and reimbursement support. Buyers now frequently conduct detailed reviews of clinical trial design, study endpoints, statistical power, publication history, real-world evidence, and health economic outcomes.

The growing emphasis on value-based care means clinical evidence is increasingly linked directly to enterprise value. Companies that can demonstrate measurable improvements in outcomes and cost efficiency are more likely to command premium revenue multiples.

Trend #4: Cybersecurity Has Become a Board-Level Issue

The increasing connectivity of medical devices has elevated cybersecurity from an IT concern to a strategic diligence priority. The FDA’s recent cybersecurity requirements have further increased scrutiny of the software bill of materials (SBOM), vulnerability management programs, secure development lifecycle practices, incident response capabilities, and penetration testing results.

During diligence, buyers increasingly employ specialized cybersecurity teams to assess risk exposure. A single significant cybersecurity vulnerability can create substantial post-acquisition remediation costs and reputational risk. Engineers should expect cybersecurity documentation to become a routine component of diligence requests.

Trend #5: Reimbursement Due Diligence Is Expanding

Many acquisitions fail not because the technology lacks merit but because reimbursement assumptions prove overly optimistic. Sophisticated acquirers evaluate CPT coding pathways, coverage policies, payment levels, physician adoption barriers, prior authorization requirements, and health economics evidence.

Questions commonly asked include:

• Is reimbursement established or emerging?
• What percentage of revenue depends on favorable reimbursement?
• What policy changes could affect adoption?

For precision medicine, digital health, and diagnostics companies, reimbursement diligence often becomes one of the most important determinants of valuation.

Trend #6: Manufacturing and Supply Chain Resilience Matter More Than Ever

Global supply chain disruptions exposed vulnerabilities across the medtech industry.

Consequently, diligence teams now evaluate supplier concentration, component shortages, contract manufacturing risks, geographic exposure, and inventory management practices. Buyers increasingly seek resilience as well as efficiency.

Engineering teams should be prepared to demonstrate supplier qualification procedures, alternate sourcing strategies, product continuity planning, and manufacturing scalability.

Best Practice #1: Begin Integration Planning Before Closing

Research consistently shows that integration planning is one of the strongest predictors of acquisition success. Leading acquirers begin evaluating organizational structures, technology integration, commercial alignment, quality system harmonization, and cultural fit during diligence rather than after transaction completion. This approach allows buyers to identify integration risks before they become value-destroying surprises.

Best Practice #2: Use Cross-Functional Diligence Teams

Modern medtech transactions require expertise from multiple disciplines. Effective diligence teams typically include corporate development, engineering, regulatory affairs, quality assurance, clinical affairs, reimbursement specialists, cybersecurity experts, and commercial leadership. Cross-functional diligence improves risk identification and reduces post-close surprises.

Best Practice #3: Validate Synergies Rigorously

Revenue synergies are often the most difficult assumptions to achieve. Leading acquirers challenge assumptions related to cross-selling opportunities, customer overlap, market penetration, pricing improvements, and product bundling. Cost synergies are generally easier to quantify, while revenue synergies require extensive validation through customer interviews and market analysis.

Best Practice #4: Focus on Data as an Asset

Increasingly, the most valuable component of a medtech company is not the device itself but the data ecosystem surrounding it. Due diligence should evaluate dataset ownership, data quality, longitudinal patient information, AI training assets, and data governance practices. Companies possessing proprietary, clinically validated datasets may enjoy substantial strategic premiums because they create barriers to competitive entry.

The Medi-Vantage Point

In the modern medtech environment, due diligence has evolved from a transaction process into a competitive advantage.

Several trends are expected to shape medtech M&A through the remainder of the decade: increased acquisition of AI-enabled platforms, greater emphasis on cardiovascular and diagnostics assets, continued consolidation in digital health, expansion of PE participation, greater scrutiny of cybersecurity and software quality, and increased focus on real-world evidence and outcomes data.²

For engineers and executives, due diligence is no longer simply an exercise in risk identification. It has become a strategic process for evaluating innovation, scalability, resilience, and long-term value creation. The companies that command premium valuations in transactions will not necessarily be those with the most innovative technologies. They will be the organizations that combine innovation with strong clinical evidence, mature quality systems, scalable operations, cybersecurity readiness, and clear reimbursement pathways.

References

1. tinyurl.com/mpo260701
2. tinyurl.com/mpo260702
3. McKinsey & Company, The Keys to Successful M&A Integration in Healthcare and MedTech.

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Maria Shepherd has more than 20 years of experience in marketing in small startups and top-tier companies. She founded Medi-Vantage, which provides marketing and business strategy for the medtech industry. She can be reached at [email protected]. Visit her website at www.medi-vantage.com.