Medtech M&A, IPOs hit new heights as more buyers enter the space: SVB

Diving Brief:

  • Mergers and acquisitions of medical devices and public offerings Reach new heights In 2021, 46 companies secured exits for their investors in deals that collectively valued them at $27 billion, according to a new report from Silicon Valley Bank.
  • Each of the 22 acquisitions and 24 factor IPOs is a record, topping the charts with 20 acquisitions in 2018 and 21 stock listings in 2015. The average upfront acquisition value rose to $223 million, up nearly 70% from the year former and first. Once SVB saw the figure above 200 million.
  • The diagnostics and tool companies have also had a busy year, with 55 exits beating a historic high of 21, and an overall value increase of nearly 50% from record-breaking 2020.

Diving Insight:

The number of medical device IPOs doubled last year, rising from 12 to 24, as companies found public investors in the United States and China willing to buy their shares. By the end of the year, six of the 2021 class had a market cap of more than $1 billion, although only two of them, Paragon 28 and Sight Sciences, were listed in the U.S.

SVB used the market capitalization at the time of the IPO to calculate the exit value. The market capitalization of the IPO prompted a doubling of hardware exit values, which rose from a record $14 billion in 2020 to $27 billion last year, but mergers and acquisitions also contributed. The number and value of M&A deals increased by 38% and 79%, respectively. SVB attributed the increase in merger and acquisition activity to expanding the pool of potential buyers of young medical device companies.

“Many of the initial public offerings over the past five years have grown into small to mid-sized companies, creating their own investment arms to fund project-backed deals. These companies have also begun to drive the trigger in technology acquisitions, forcing larger players to buy up the companies. earlier. This has resulted in a very active M&A market.”

Buyers have been very active in the diagnostics and instrumentation segment as well. SVB tracked eight acquisitions of diagnostic testing companies and seven acquisitions of diagnostic analytics operators, compared to three deals and one deals, respectively, in 2020. Previous deal records for diagnostic testing and analytics firms were four and one deals, respectively.

When 10 deals for research and development tool companies are taken into account, mergers and acquisitions in this sector totaled $7.5 billion, down from the record for 2020 but well above historical levels. SVB expects private sector mergers and acquisitions to remain strong in 2022, with the bank anticipating more than 20 deals. However, the bank expects a lower number of IPOs and their valuations.

In the medical devices space, SVB expects “M&A activity to remain hot, with a diverse group of acquirers vying for the best deals,” but it sees a slowdown in IPO activity.

Investors put another batch of start-ups on their way to mergers, acquisitions and IPOs last year. Venture investment in medical device companies rose from $5.8 billion to $8.8 billion, driven by three times the investment in Europe. Non-invasive surveillance has been the most active area in both early and late stage investing, with the 46 Series A investments in space startups getting rid of the 17 deals in the next most active area, imaging.

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