Medtech M&A: choosing between private equity and strategic buyers
To view our article on the Today’s Medical Development Magazine website, click here.
Editor's note: This article originally appeared in the September 2026 print issue under the headline "The build-to-buy moment".
Ask a lower-middle-market medtech founder to picture their eventual buyer and many still imagine a single type: a strategic – a larger competitor or diversified device maker folding the business in and writing one check. It’s a common assumption, and it’s incomplete. Financial sponsors aren’t new arrivals at the table. Private equity (PE) has been an active, and often dominant, buyer of lower-middle-market medtech for the better part of two decades, running buy-and-build platform strategies consolidating fragmented niches one acquisition at a time. In the last decade especially, sponsors have often been the more likely counterparty for founder-owned businesses below the large-cap line.
The numbers reinforce an established trend rather than a sudden one. PE-backed medtech deal value reached roughly $33 billion in 2025, nearly double the prior year, and add-on acquisitions now make up the majority of U.S. private-equity deal count. For a company in the $5 million to $75 million enterprise-value range, the party across the table is at least as likely to be a sponsor – or a sponsor-backed platform – as a corporate development officer. Understanding both buyer types isn’t optional; it’s the foundation of a smart process.
Two buyers, two philosophies – one opportunity for an M&A process to maximize value
A strategic acquirer underwrites to permanent ownership and synergy capture. It tends to pay a higher headline multiple for an asset that fits its sub-vertical, wants to integrate the business, and generally doesn’t need the founder to stay. For the right premium asset, that can mean strong cash at close and a clean break.
A PE platform underwrites differently. Sponsors buy durable, scalable cash flow they can grow over a three-to-seven-year hold and sell again. They typically want the founder involved and structure the deal so you keep skin in the game – in our segment, rollover equity of 15% to 25% is common. The headline number may be lower than a strategic’s, or a portion may sit in earnouts and rolled equity rather than cash. But total economic value, including that retained stake, often favors the sponsor path.
There’s an added dimension: are you the platform or the add-on? Selling as a platform – the anchor a sponsor builds around – commands a premium multiple but brings heavier diligence and the expectation that you’ll help lead the build. Selling as an add-on means a lower multiple and a faster close, but you’re joining someone else’s structure and governance. Same buyer type, very different economics and role. Know which conversation you’re in before you negotiate.
The second bite
Rollover equity is often called the “second bite of the apple”: you sell most of the company, keep a piece, and that piece grows on the sponsor’s capital until the platform exits – sometimes a larger check than the first. The upside is real, but not guaranteed. Rolled equity is illiquid; you can’t force a sponsor to buy you out, and it carries risk from platform underperformance, multiple compression, and dilution from later add-ons. The costliest mistake we see is a founder who negotiates hard on enterprise value, barely glances at the rollover terms, and signs. The share class, the preference stack, governance rights, and your liquidity window determine whether that second bite actually pays.
Run the market M&A play, don’t let it run you
The point isn’t that PE beats strategics, or the reverse – both have been credible buyers of medtech for years, and the best fit depends on your goals for price, structure, and involvement. The mistake is assuming only one type exists. A process inviting both PE platforms and strategics creates genuine competitive tension and lets you choose the best mix of value and fit. The buyer universe has been broad for a long time. Your process should reflect it. And make sure you have someone on your side as an M&A advisor, as it’s been proven that sellers get >20% higher enterprise values when using an M&A advisor versus going alone to make a deal with a PE firm or a strategic buyer.