Selling Your MedTech Company During The Pandemic

Medical device companies and contract manufacturers fell victim to the pandemic when ‘non-essential’, elective surgeries were temporarily discontinued.  For many companies, the negative impact in second quarter revenues and earnings have compounded during the recovery.  Companies in the MedTech space are now under pressure to meet the increased demand for their products and exceed financial expectations that were established early in 2020.

Ramping up to pre-COVID levels of productivity has created stress in  organizations due to an interrupted supply chain, production employees returning from furlough and lack of immediate access to capital.  Whether your plan was originally to sell your company this year or if the negative impacts of the COVID-related recession have put you in the mindset to exit your business sooner than anticipated, there are still definitely ways to realize the value of your expertise and years of building the company in the current environment.

Many buyers of MedTech companies rely on cash flow as an indicator of value.  While an experienced advisor can work with sellers to establish and present arguments for higher valuations, buyers want an understanding of the cash conversion cycle which allows for all parties to come to mutually beneficial terms.

While financial performance may have been impacted by the pandemic, a company’s past performance should still be taken into account in order to realize the value you seek on your most valuable asset.  Again, an experienced advisor, especially in your specific market, can work with you to present the long-term benefits of acquiring your business, and establishing terms that allow all parties to benefit.

In preparation of a sale, whether that time is now or in the near future, it is important to understand the factors that help drive value in your business:

• Current and accurate documentation. This includes financial statements, tax returns, equipment lists, employee records and inventory accounts.
• Personnel and processes that will allow the business to continue profitably after your exit.
• Understanding of your goals and economic needs after transitioning away from your business.

Kinsella Group would be pleased to provide you with our thoughts regarding your specific situation.  Please don’t hesitate to contact us if we can be of service.

Kinsella Group, Inc. is an investment bank focused exclusively on the MedTech and medical contract manufacturing markets.  We have been representing buyers and sellers in this space for over 20 years, working to exceed desired outcomes.  For more information, please contact Bob Kinsella at robert.kinsella@kinsellagroup.com or by calling (312)229-1357.