Overview
This webinar was a featured pre-event program leading up to our Life Sciences Investment Forum on November 13 in Boston. The webinar was designed to complement the Forum’s broader exploration of investment themes across the life sciences sector.
Setting the Stage
As MedTech companies evolve, they face increasing complexity in both their technologies and organizational structures. This webinar examined how industry leaders are adapting to these challenges—highlighting strategic approaches to innovation, resource allocation, and investment readiness in a rapidly shifting landscape.
MedTech Carve-Outs: Key Trends at a Glance
With product portfolios becoming more technically complex—spanning mechanical, electrical, software, and biological components—many companies lack the internal R&D depth to pursue promising but underfunded programs.
To overcome this, many are spinning out smaller initiatives to external partners and investors, sharing development risk while tapping into broader resources. These ventures create optionality—whether scaling independently, attracting acquisition interest, or, in select cases, being reintegrated—allowing companies to drive more innovation with less internal strain.
The carve-out model is gaining traction among mid-scale players, giving operating companies more shots on goal and a capital-efficient path to growth.
Carve-outs as a growth strategy
Carve-out strategies are increasingly being adopted by MedTech companies to share risk, access technical and financial resources, and accelerate innovation. This approach is particularly valuable for mid-scale companies that need capital efficiency and focus. Typically, non-core assets are divested to other companies or investors, with some deals structured to preserve buyback or licensing options—though reintegration remains the exception rather than the rule.
Strategic Benefits for Parent Companies and Spin-Offs
Both parent companies and spin-offs gain significant advantages from carve-outs. Parent companies receive a cash infusion, sharpen their focus on core operations, and unlock shareholder value by divesting non-core assets. Spin-offs, meanwhile, gain independence in strategy and financing, a clearer market identity, and the potential for outsized growth—especially when targeting unmet needs or emerging trends in the MedTech space.
Transaction timelines and operational complexity
MedTech carve-out transactions can be lengthy and complex, sometimes taking 12 to 18 months or more, and require rigorous diligence across IT infrastructure, intellectual property, tax, and regulatory matters. Transition Services Agreements (TSAs) are critical to maintaining continuity as the new entity establishes its own systems, while a disciplined strategy, clear vision, and strong partnerships enable both parent and spin-off to navigate operational challenges and capture value.
Technical and regulatory challenges
The multidisciplinary nature of MedTech products presents significant technical and regulatory challenges. External partners and investors provide crucial resources to advance technologies, manage regulatory pathways, and ensure clinical validation. Maintaining strategic ties to the parent company can be advantageous, particularly in cases where licensing or reacquisition options are built into the transaction.
Emerging deal structures and market trends
Deal structures are evolving to include off-balance sheet incubation models and contractual options to repurchase successful technologies. These mechanisms allow large companies to transfer development risk while retaining potential upside. At the same time, the market is trending toward smaller, more focused deals that drive innovation in specific therapeutic areas, with venture capital activity concentrated in surgical technologies and AI.
Venture capital investment landscape
The venture capital investment landscape in MedTech appears to be improving, with $8.5 billion invested in the first half of 2025. Capital is flowing primarily into surgical technologies and AI, reflecting strong interest in precision medicine and surgery. However, the funding environment remains challenging for early-stage companies, as investors favor fewer, larger rounds focused on later-stage firms with proven traction. For startups, the most common path to exit is acquisition by larger MedTech companies, provided they can meet critical development and regulatory milestones.
Looking Ahead: Life Sciences Investment Forum
This webinar served as a featured pre-event leading up to our Life Sciences Investment Forum on November 13 in Boston, where we will be discussing broader investment themes across the life sciences sector. This premier event is crucial for unlocking capital-ready opportunities, accelerating high-value dealmaking, and connecting with key decision-makers in the industry. It provides a platform for building essential relationships and strategic partnerships that can drive your company’s growth and market leadership.