What was the climate like for M&A in the medtech space in 2025? Also, what will 2026 look like for deal activity? MD+DI spoke with Bryan Hughes, managing director of the healthcare team at PMCF, a U.S.-registered broker/dealer and investment bank providing M&A services to companies throughout the Americas, Europe, and Asia, to discuss deal trends.
If you had to describe dealmaking in 2025 in one word, what would it be?
Hughes: Turbulent
How was deal-making in the first part of the year compared to that same period in 2024?
Hughes: Medical Technology M&A activity in early 2025 trailed the pace set in 2024, as buyers remained cautious amid regulatory and tariff‑related uncertainty. While deal volumes were notably lower year‑over‑year, the market found firmer footing in Q2 and Q3, with deal volume stabilizing after several quarters of decline.
How did tariffs impact deal value and valuation – or did they have much of an impact?
Hughes: Tariff policy shifts created meaningful uncertainty across the medical device industry, which in turn impacted transaction activity and overall valuations. Rapid changes in trade rules early in the year complicated buyers’ ability to reliably forecast earnings and margin durability, resulting in wider valuation spreads and more creative deal structures. The industry is quite resilient, and many industry participants have successfully mitigated tariff exposure. The last several months have proven relatively calm, but the prospect of further Section 232 tariffs on the horizon continues to influence buyer underwriting.
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Did we see private equity making more acquisitions this year or having a stronger presence in medtech M&A?
Hughes: Private equity remained highly active in 2025, and we expect sponsors will continue to be a significant player in 2026. Even with more sophisticated or innovative devices, PE buyers are increasingly competitive in processes. Within the broader supply chain, private equity has driven significant consolidation over the last decade but started to experience a bit of ‘platform aging’ in 2025. This should drive a number of platform sale transactions in 2025.
As importantly, private equity firms continue to sit on record levels of dry powder, which should support elevated activity moving into 2026.
What is the current state of private equity activity in 2025, particularly in terms of platform investments, add-ons, and strategic buyer participation?
Hughes: Private equity activity in 2025 was defined by disciplined deployment and heightened selectivity. Sponsors aggressively pursued high‑quality platforms with differentiated capabilities—especially in contract manufacturing, diagnostics, digital health, and consumables—while add‑on activity remained robust as firms prioritized buy‑and‑build strategies to accelerate growth.
Strategic buyers maintained a strong presence but often faced stiff competition from sponsors benefiting from improved financing conditions and a more favorable leverage environment in the back half of the year.
How has demand within domestic and foreign M&A markets evolved in 2025, and what factors are driving these changes?
Hughes: From a supply chain perspective, one of the more interesting results of tariff volatility has been an increased focus on cross-border M&A. As companies continue to firm up supply chains, this is inevitable. Particularly as the US seeks substantial direct foreign investment.
For global strategics, acquisitions outside home markets offered access to new patient populations and novel technologies. Growing concerns about constrained federal research funding, especially potential NIH budget pressures, may further elevate international innovation sourcing in the years ahead.
What macroeconomic headwinds have impacted M&A activity in 2025, and how have companies adapted to these challenges?
Hughes: Policy changes in Washington had a meaningful impact on M&A activity during much of 2025, including tariff policy, reorganization of CMS and associated cuts in Medicare/Medicaid programs, and broader, more fundamental changes in economic policy created a complex backdrop for deal evaluation. But with any change, there is also significant opportunity and with companies now having a better sense of the playing field, and we expect activity to pick up in 2026.
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