Medtech deal value rose year over year and rebounded above pre-2023 levels, bolstered by renewed strategic confidence and several large transactions (see Figure 1). The second half of the year was particularly strong, nearly doubling first-half deal value as valuations continued to decline. Robust dealmaking is likely to continue into 2026.

Figure 1

While large deals such as Waters’ acquisition of BD’s biosciences and diagnostics businesses and Stryker’s acquisition of Inari Medical grabbed the headlines, deal-making momentum continues to be dominated by smaller, targeted transactions. One standout trend was the rise in spin-offs and divestitures, which accounted for more than a third of strategic deal value in the first 11 months of 2025—a noticeable increase from the previous five-year average (see Figure 2). In 2026, the possibility of even softer valuations will intensify competition for quality assets, making speed, conviction, and disciplined execution essential to success.

Figure 2

Increasingly, leadership teams are revisiting key questions: Is this asset part of our core portfolio? Could a different owner create more value with it? Do we hold the investment, expertise, and scale needed to lead in this sector?

Recent carve-outs by BD and Solventum—along with announced activity from Medtronic and Johnson & Johnson—signal a broader shift toward portfolio focus and category leadership, creating momentum for continued spin-off activity in 2026. BD’s separation of its biosciences and diagnostics solutions businesses reflects an intent to streamline the portfolio and accelerate performance in core markets by reducing adjacency complexity. Solventum’s divestiture of its purification and filtration unit supported debt reduction, and it enabled a sharper focus on core operations.

What to keep in focus:

• Softer valuations will heighten competition for high-quality assets. Smart buyers will determine where they can outperform the next-best owner. That includes articulating how to create more value from the asset than another buyer—whether through scale advantages, a stronger go-to-market strategy, or a unique strategic fit.
• Building carve-out muscle is no longer optional. Carve-outs are likely to remain a substantial part of medtech M&A over the next few years as companies refocus their portfolios. Bain research finds that, across industries, 50% of companies pursuing a separation fail to create any new shareholder value after two years, and 25% destroy a significant amount of shareholder value in the process. Those top-quartile companies that succeed, however, substantially outperform by having a clear separation thesis and a sustainable roadmap to value creation. Medtech leaders will need to master the carve-out capability—being able to separate their manufacturing and supply chains, disentangling their quality systems, and minimizing the amount of stranded costs.
• Headline acquisitions get attention, but most are not building category leaders. Serial, targeted, capability-building deals that sharpen a company’s edge—whether it be in robotics or diagnostics or imaging—can often be more effective in increasing category leadership. Medtech leaders will need to build on their sourcing capabilities to uncover assets before they hit the market. This will also call for even more discipline to pursue only the deals that strengthen their strategic spine.