Nelson Advisors: MedTech M&A Increases 150% YOY as Private Equity Invests More Money into MedTech
MedTech M&A Increases 150% YOY as Private Equity Invests More Money into MedTech, But Focuses on Deals with Bigger Tickets in Faster Growing Categories
Fewer, larger, more selective: what the first half of 2026 tells us about where private capital is going in MedTech, and how investors should think about carve-outs, take-privates and the categories that are attracting the biggest cheques
A Market That Got Bigger Without Getting Busier
The headline number for MedTech M&A in 2026 is striking. In the first half of the year, deal value was roughly 160% higher than the same period in 2025. The more interesting number sits beside it: deal count rose by just 5%. Average deal value more than doubled, from slightly less than $1 billion to approximately $2.1 billion, according to EY and Capital IQ data.
That combination, a modest increase in the number of transactions alongside a dramatic rise in value, tells you almost everything you need to know about the state of the market. This is not a broad-based recovery in which every asset finds a buyer. It is a concentration of capital into a smaller set of larger, higher-conviction transactions. Investors are paying up for the businesses they want and walking past the ones they do not.
It follows a record year. PwC tracked $97.6 billion of MedTech deal value in 2025, a decade high, driven by Abbott's $21 billion acquisition of Exact Sciences, BD's $17.5 billion combination with Waters, and the $18.3 billion take-private of Hologic by Blackstone and TPG. The first half of 2026 has kept that momentum, with $36.5 billion tracked through June and five transactions above $1 billion, including Danaher's $9.9 billion acquisition of Masimo and Boston Scientific's move for Penumbra.
Two things are happening at once. Large strategic MedTech companies are reshaping their portfolios towards the categories they believe will grow fastest over the next decade. And private equity, with record dry powder and a willingness to take on scale, has become the natural counterparty for the assets that strategics no longer want and the public companies that the market no longer rewards.
What the Numbers Say About Selectivity
The gap between value growth and volume growth is the signature of a selective market. When capital is abundant but conviction is scarce, buyers cluster around the same handful of assets and compete on price. When capital is scarce, volume falls and value falls with it. The first half of 2026 is the former: capital is available, but it is being deployed with a narrow aperture.
Investors are focused on finding innovative businesses with strong growth prospects and recurring revenue models. In practice this means several things. Buyers want companies that are already commercial, or at least late-clinical with a clear path to reimbursement, rather than early-stage technology bets. They want revenue that recurs through consumables, service contracts, software subscriptions or procedure volume, rather than lumpy capital equipment sales. And they want exposure to categories where procedure growth is structurally above the market average.
Those categories are well understood. Cardiovascular care, and especially structural heart, electrophysiology and peripheral vascular intervention, continues to be the centre of gravity for strategic acquirers. Boston Scientific, Medtronic, Abbott and J&J MedTech have all been active in cardiology adjacencies, with Medtronic's acquisitions of CathWorks, Scientia Vascular and SPR Therapeutics illustrating the pattern of buying late-clinical and early-commercial assets in high-growth niches.
Neurostimulation and neuromodulation, connected care and remote monitoring, robotic and enabling technologies, and diagnostics with recurring consumable revenue are the other recurring themes.
The corollary is that assets outside those categories, however profitable, are finding it harder to command strategic attention. That is where private equity comes in.
Why Private Equity Is Moving In
Three conditions have combined to make MedTech unusually attractive to financial sponsors in 2026.
The first is valuation. Through the first half of 2026, MedTech equities have been trading at a discount to the S&P 500. For a sector that traded at a consistent premium for most of the last decade, that discount is a signal to buyers that public markets are underpricing durable, cash-generative businesses. Private ownership, as PwC noted in its mid-year outlook, may better support multi-year value creation for companies whose investment needs do not fit a quarterly earnings cycle.
The second is dry powder. Healthcare-focused and generalist sponsors have raised very large funds over the last three years and face pressure to deploy. MedTech offers what few other healthcare subsectors can: regulated, defensible products, predictable procedure-driven demand, and, in many cases, margins that improve with scale.
The third is supply. Strategic MedTech companies are increasingly focused on reducing portfolio complexity and are allocating resources to faster-growing areas or a subset of their overall portfolio. That creates a steady flow of divisions and product lines that perform well but no longer fit the growth profile or long-term strategy of a publicly traded parent. It also creates a set of standalone public companies, often themselves the product of earlier spin-offs, that lack the scale or growth to attract a strategic premium and whose boards are open to a sponsor-led exit.
The recent transactions demonstrate the scale of sponsor interest. Blackstone and TPG's $18.3 billion take-private of Hologic, completed earlier this year, was the largest MedTech buyout in recent memory.
American Industrial Partners agreed in April to acquire Avanos Medical for approximately $1.27 billion and closed the deal in July. KKR's approximately $5.7 billion acquisition of Integer, announced in August at $127 per share and a premium of more than 50% to the pre-review price, highlights the breadth of private capital moving into the MedTech ecosystem, including medical device contract manufacturing and refurbishing. Integer supplies electrophysiology catheters, cardiac leads and batteries to Abbott, Boston Scientific and Medtronic. Owning the manufacturer behind the fastest-growing categories is one way to get exposure to those categories without paying strategic multiples for the branded products themselves.
Two Transaction Strategies Are Emerging
Within that broad picture, two transaction types dominate sponsor activity: carve-outs and divestitures on one side, and take-privates on the other. They are different in structure, risk and value-creation logic, and a disciplined investor should understand both.
Carve outs and divestitures
What it looks like in practice. A sponsor acquires a MedTech division or product line rather than the whole company. The seller is typically a large, publicly traded strategic looking to simplify; the asset is often profitable, established and under-invested.
Why strategics are selling. With MedTech equities trading at a discount to the broader market, management teams are under pressure to demonstrate that every part of the portfolio contributes to growth and margin. Divisions that are stable but slow, or that require capital the parent would rather deploy in cardiology or neuroscience, become candidates for divestiture. Selling those units lets the parent improve its blended growth rate, redeploy capital into higher-return areas and present a cleaner story to investors. The GN Store hearing business sold to Amplifon and Agilent's acquisition of Biocare Medical for $950 million are examples of assets changing hands as parents refocus.
Why it appeals to PE firms. Carve outs can provide established products, customers, regulatory clearances and market share without purchasing an entire company. Crucially, the value-creation thesis does not have to rest on cost-cutting. A carved out business that was starved of investment inside a large parent can often grow through new product development, geographic expansion, commercial investment or add on acquisitions. In many instances a carve out can serve as a platform: it delivers sufficient assets, operational capabilities and financial scale to enter an attractive segment, and the sponsor then builds around it through bolt-ons.
What can go wrong. Carve outs are operationally the hardest transactions in MedTech. The acquired business usually depends on the parent for quality systems, regulatory affairs, IT, distribution and shared manufacturing. Transition services agreements can be long and expensive. Regulatory clearances and CE marks may be held in the parent's name and need to be transferred, a process that varies by jurisdiction and can take months. Customer contracts may be bundled with products the buyer is not acquiring. Sponsors that underestimate the standalone cost base or the timeline to full separation routinely see the first two years of their plan consumed by disentanglement rather than growth.
Take privates
What it looks like in practice. A sponsor, or a consortium, acquires a listed MedTech company in its entirety, typically at a premium to the undisturbed share price, and delists it.
Why boards are selling. Public MedTech companies below a certain scale face a structural problem. They are too small to attract the analyst coverage and index inclusion that support a full valuation, but too large to be acquired by most strategics without a premium those strategics are unwilling to pay for slower-growth assets. Boards of such companies, when approached by a sponsor offering a 40% to 50% premium, have a fiduciary reason to engage. Hologic, Avanos and Integer all fit that profile in different ways: durable businesses, credible management, and a public valuation that did not reflect what a patient owner could build.
Why it appeals to PE firms. Take-privates deliver a complete business with its own infrastructure, so the separation risk of a carve-out is absent. The value-creation thesis usually rests on capital allocation freed from quarterly scrutiny: investing in capacity, product pipelines or M&A that the public market would have punished in the short term. Integer's own explanation of the KKR deal, that private ownership would provide "flexibility and long-term capital to invest in its capacity, technology and innovation," captures the logic precisely.
What can go wrong. Take-privates are expensive. The premium is paid up front, the leverage is real, and the exit depends on either a strategic buyer emerging in three to five years or an IPO market that is receptive. A business that was slow-growing in public hands does not become fast-growing simply by delisting. Sponsors need a concrete plan to change the growth trajectory, whether through product, geography or acquisition, and that plan has to survive tariff uncertainty, supply chain disruption and rate movements, all of which PwC identifies as headwinds shaping dealmaker behaviour in 2026.
The Categories Attracting the Biggest Tickets
The shift to bigger tickets is not random. It reflects where both strategics and sponsors believe structural growth lies.
Cardiovascular remains the largest and most contested category. Structural heart, driven by transcatheter valve replacement and repair, continues to expand its addressable population as indications broaden.
Electrophysiology has been transformed by pulsed field ablation, and every major player is investing to defend or capture share. Peripheral vascular, including thrombectomy and coronary imaging, is where Boston Scientific's Penumbra deal and Medtronic's smaller acquisitions sit. For sponsors, the way into cardiology is often indirect: through contract manufacturers like Integer, through component suppliers, or through service and refurbishment businesses that ride procedure volume without competing with the strategics.
Neurostimulation and neuromodulation are the second theme. Spinal cord stimulation, deep brain stimulation, peripheral nerve stimulation and a growing set of indications in pain, movement disorders and psychiatric conditions are attracting both strategic and sponsor capital. The recurring revenue profile, with implantable generators and follow-on replacements, suits the models that investors favour.
Connected care and remote monitoring form the third. Devices that generate data, software that interprets it and services that act on it have moved from pilot to reimbursement in several major markets, and the recurring revenue and switching costs of connected platforms are attractive to sponsors who have seen the same dynamics in software.
Diagnostics with consumable pull-through, surgical robotics and enabling technology, and specialty categories such as women's health, where Hologic sits, round out the list. In each case, the common thread is a combination of procedure growth above the market, a recurring revenue mechanism, and a regulatory moat that a well-capitalised owner can widen.
What is notable is what is absent. Commoditised consumables, capital equipment with long replacement cycles and categories exposed to reimbursement pressure or tariffs are not where the big tickets are going. Those assets still transact, but at multiples and in structures that reflect their profile.
A Disciplined Targeting Framework
MedTech deal opportunities are plentiful, but finding the right ones and capitalising on them requires a disciplined targeting framework and an in-depth understanding of operational, regulatory and execution risk. For a sponsor or a strategic evaluating the current market, that framework needs to address at least five questions.
The first is category conviction. Does the asset sit in a segment where procedure volume, reimbursement and clinical evidence are moving in the right direction over a five-year horizon? Buying a well-run business in a shrinking category is a value trap, and the market's shift to fewer, larger deals is a rational response to that risk.
The second is the source of growth. If the thesis depends on growth rather than cost, where specifically will it come from? New indications, new geographies, a pipeline product, a commercial investment the parent never made, or bolt-on acquisitions? Each of those has a different risk profile and a different timeline, and a plan that relies on all of them at once is not a plan.
The third is regulatory and quality posture. MedTech is a regulated industry, and the quality of a target's quality system is often the single largest determinant of post-deal surprises. An FDA warning letter, an EU MDR transition that has not been completed, or a quality management system that lives inside a parent's infrastructure and will need to be rebuilt can each consume a year of the value-creation plan. Due diligence that treats regulatory affairs as a box to tick rather than a core workstream is where carve-outs go wrong.
The fourth is operational separability, which applies to carve-outs specifically but also to take-privates of companies with entangled supply chains. What does the business actually cost to run on a standalone basis, and how long will it take to get there? Sponsors that have done multiple carve-outs tend to have a realistic view; those doing their first tend to be optimistic.
The fifth is exit. Who buys this business in five years, and at what multiple? If the answer is a strategic, does the asset fit the categories strategics are buying? If the answer is another sponsor, is the growth story credible enough to support a secondary buyout at a higher price? If the answer is an IPO, is the business large and growing enough to command public attention that the current owner lacked? The market's own behaviour, in which strategics pay up for high-growth categories and let the rest go, is the best guide to what exits will look like.
Implications for Strategics, Sponsors and Founders
For large strategic MedTech companies, the current market is an opportunity to reshape portfolios on favourable terms. Sponsors are willing to pay reasonable prices for non-core assets, and the capital released can be redeployed into the categories where strategics have the strongest right to win. The risk is that the divested businesses, freed from the parent's constraints and given investment, become competitors or acquisition targets for rivals.
For private equity, the opportunity is obvious but the discipline required is considerable. The businesses available are, by definition, the ones strategics have decided not to prioritise. That does not make them bad businesses, but it does mean the sponsor's value-creation thesis has to be more specific than "we will run it better." The most successful MedTech sponsors have built operating capabilities in regulatory affairs, quality, commercial execution and add-on integration, and treat those capabilities as part of the investment case rather than a service they buy in after closing.
For founders and management teams of growth stage MedTech companies, the message is that capital is available for businesses that fit the profile: commercial traction, recurring revenue, a defensible regulatory position and exposure to a category with structural tailwinds. Companies that do not fit that profile will find fundraising and exit harder than the headline M&A numbers suggest. The market is rewarding scale and clarity, not breadth.
Risks to the Thesis
The first half of 2026 has been strong, but several things could change the picture in the second half and into 2027.
Financing conditions matter more for take-privates than for any other transaction type. A sustained move in credit spreads or rates would change the arithmetic on large leveraged deals quickly. The Hologic and Integer transactions were financed in a window that may not persist.
Tariffs and supply chain disruption, which PwC flagged as shifting dealmaker focus towards operational resilience, affect MedTech disproportionately because of its globalised manufacturing footprint. A carve-out with manufacturing in tariff-exposed jurisdictions carries risk that did not exist two years ago.
Regulatory change, whether in the form of EU MDR enforcement, FDA policy on software and AI-enabled devices, or reimbursement decisions in the categories attracting the most capital, could shift the growth profile of individual segments quickly.
And there is the risk of crowding. When every sponsor is targeting the same categories and the same transaction types, prices rise and returns compress. The average deal value more than doubling in a year is a sign of conviction, but it is also a sign that buyers are competing for a limited set of assets. The discipline that the market currently displays in volume may not survive a further increase in the capital chasing it.
Conclusion
MedTech M&A in 2026 is bigger, more concentrated and more selective than it was a year ago. Value is up roughly 160% year on year on a deal count that has barely moved, and the average ticket has more than doubled. That reflects two forces acting together: strategics repositioning towards cardiovascular, neuro-stimulation and connected care, and private equity stepping in, at scale, to buy the assets that strategics no longer prioritise and the public companies that markets no longer reward.
Carve outs and take privates are the two strategies through which that capital is flowing, and each carries a distinct set of risks. Carve outs offer growth without separation risk only for buyers who understand what separation actually costs. Take privates offer complete businesses only for buyers who can articulate what changes under private ownership.
The opportunity set is large. But the market's own behaviour, its preference for fewer, larger, higher-quality transactions, is the clearest possible guidance for anyone entering it. In this environment, the winners will be the investors with a disciplined framework for choosing targets and a clear-eyed understanding of the operational, regulatory and execution risks that sit behind every deal.
Nelson Advisors > European HealthTech, MedTech, Digital Health Investment Banking
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