Orthopedic merger and acquisition activity increased every year between 2017 and 2020, peaking at 42 transactions that year. Companies remained aggressive in 2020 as they scooped up smaller or distressed assets. However, transaction volume fell to just 23 deals in 2021. Elevated prices – and continued pandemic fallout – contributed to the usually active top-tier players passing on deals.
In general, medtech M&A transactions are nearing an all-time high with peak valuations. The IPO market is also record-setting in terms of volume and valuations. Bioventus, Paragon 28 and Treace Medical Concepts went public in 2021. Given the attractive foot and ankle market, both Paragon 28 and Treace have likely been priority acquisition targets.
While orthopedic M&A slowed in 2021, we expect a rebound for transaction volume in 2022. The largest players remain vocal that they will favor cautious tuck-in acquisitions and early-stage partnerships.
In considering the 2021 acquisitions, spine remained the most active segment accounting for 27% of all transactions. Digital technology and joint replacement tied for second with 18%. We expect the proportion of digital tools M&A to grow in the coming years as companies build out their technology portfolios.