The March of MedTech – Trends and Opportunities in Global HealthCare and LifeSciences M&A

Virtual Round Table Series MedWorld Advisors 2017

What does the M&A landscape look like in your jurisdiction?

The healthcare sector in Germany is quite vibrant right now with plenty of activity. We are seeing certain valuations up to 10 or 12 times EBITDA, particularly for good mid-sized deals. A lot of investors concentrate on healthcare and life sciences during economic dips, because the sector is largely recession proof.

Most of the healthcare sector is public in Germany, but it is under pressure so people are beginning to choose private insurance, which provides more money for research and new technology. Big companies are buying mid-sized companies in new tech and MedTech.

There are hotspots in Germany where start-ups congregate, and big players look for acquisition opportunities.

The main barrier in the healthcare sector though is the high level of regulation in Germany, which makes deals quite complicated. Many foreign investors are also structuring deals with high levels of debt, which could create problems in the future.

 

What do businesses you see need to do to boost their value and make themselves more attractive to potential buyers?

Investors are not looking for big deals in Germany. We have one private equity firm at the moment trying to get out of a hospital chain, because it’s too big. They are looking for small or mid-sized deals, which are more interesting than the big ones.

 

What is the process you go through when a business comes to you ready for sale and how do you help them to maximise returns?

One of the things we have to do as advisors is to educate our clients not to just look locally, but to look outside Germany or the EU to buy and sell companies. The cultures are always different, which can be an issue, but it is a case of being prepared for how a Chinese buyer might behave as opposed to a German one.

 

How does your expertise add value to your life sciences clients?

As I mentioned in the beginning, healthcare and life sciences is a highly regulated market, and you have to have some knowledge of how that works in your country and with your partners in their part of the world. You also need to know the IP laws well, or the state laws surrounding the hospital sector, as an example.

We have the knowledge all over the world through the MedWorld network which is there to be leveraged. I recently had a communications problem with a Chinese client, and I quickly called David in Hong Kong, who drafted a really nice reply for me. Relations with the client improved and I have done three deals with him already.