Medical Device & Biotech

Orion Capital Group has unique experience in selling medical device and biotech companies. Many of our principals have industry experience resulting in a smoother negotiating process and a greater possibility of reaching strategic buyers.

The medical device and biotech sector includes devices & diagnostics, pharma & biotech and laboratory businesses. The M&A process in this sector requires specialized knowledge in order reach correct valuations.

Strategy and valuation in this industry is probably the most crucial because valuations hinge on a number of factors that are non-existent in other sectors. For example, FDA considerations, Stark laws, GPO contracts and intellectual property considerations are important factors to consider to in finding the right strategic buyer. Additionally, the sales process must take into account:

long regulatory cycles
the market dominance and distribution channels of the big pharmaceutical companies
the great amount of innovation
the fact that most small to medium companies have only one product and may be undervalued

Understanding these unique features is necessary to understand how your potential buyers view your value and how to use that knowledge to obtain the highest price for your company. Orion Capital Group has the depth of knowledge necessary, and commonly engages engineers, doctors, and scientists to look beyond the numbers to find hidden value.

Recent M&A Trends

The lower middle-market (deals under $100 million) has weathered the credit freeze and "Great Recession" better than the upper middle market has. The deal landscape for the middle market has changed as Wall Street has struggled, but so far, deals are getting done.

The biggest change has been in the deals has been valuations, reliance on debt and reliance on the seller to finance part of the deal. We have seen an increased use of earn-outs, which are typically used in periods where interest rates are high or credit is tight. Thus, PE groups have not stopped investing, and in fact are aggressively trying to deploy their capital into middle-market companies.

As profits are returning, many strategic buyers are more willing to use their cash reserves to purchase various technologies or intangibles that are of synergistic value to them.

Depending on your situation, now could be a good time to seek an exit or even plan for an exit several years down the road. For those that want top dollar for their company and know it will achieve strong, consistent growth for many years, now is definitely not the right time to sell. While valuations may be down, there are many creative ways of structuring deals that may not affect your end proceeds much.

Therefore, if you are a business owner looking to sell, do not avoid doing so due to market conditions. While current market conditions might require a more nuanced approach, the directors at Orion Capital Group have the experience to help you weather these current changes.

If you would like to learn more about Orion Capital Group, please contact us by your prefered means. Any mode of communication is held strictly confidential.

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