In economically challenging times, innovation is required not only in product design and regulatory strategy, but also in corporate structuring and strategy. The MedTech sector, characterised by rapid technological cycles, stringent regulatory requirements (including MDR/IVDR), and increased pressure to innovate, faces unique strategic challenges. Companies must position themselves flexibly to secure access to new technologies, accelerate development cycles and manage capital intensive manufacturing and certification processes.
As a result, M&A transactions are playing an increasingly important role in strategic planning. Although the market shows slight signs of recovery, overall transaction activity remains cautious. Traditional asset or share deals often reach their limits – what is needed are innovative deal structures which directly support strategic objectives.
Asset Swaps
Asset swaps provide an elegant solution in situations where two companies – often direct competitors or complementary technology providers – exchange business units (or parts thereof) which are strategically better suited and, thus, more valuable to the other party.
Asset swaps become particularly relevant when these business units are not organised as standalone legal entities. In such cases, the assets to be exchanged must be clearly identified and valued. As valuation differences can rarely be avoided, compensation payments are agreed between the parties to ensure economic balance. Nevertheless, this structure can help preserve liquidity, as no purely cash-based purchase price is paid. Transitional services agreements govern essential matters such as supply chains, quality assurance and IT until full operational separation is achieved. Especially in the MedTech sector, asset swaps can be used to optimise portfolios in a targeted manner.
Share-for-Share Transactions
Share-for-share transactions (also known as share swaps) are another example of an innovative deal structure. In such arrangements, one party exchanges its shares for shares in the other party. This transaction type is frequently used in mergers, acquisitions or corporate restructurings, where the acquiring company offers a (often small) portion of its own shares as consideration for (often all) shares of the target company. Instead of receiving a cash purchase price, sellers obtain shares in the acquiring entity. The sellers thus remain invested in the acquiring entity, which is a meaningful factor in the MedTech sector, where key personnel are often crucial to retaining know-how.
The transaction can be structured as a pure share swap or as a share swap combined with a cash component. This model preserves liquidity while enabling long-term retention of key personnel. Valuing both companies represents a challenge but also provides an opportunity to achieve genuine alignment of interests.
Carve-Outs
Carve-outs are especially relevant where business units - such as production sites, digital product lines, or specialised service units - are integrated into broader corporate structures and are not organised as separate legal entities.
The carve-out unit is usually a business division, but other units or assets – for example a single manufacturing site – may also be separated. Spinning off such assets into a standalone legal entity creates clarity and facilitates targeted development or divestment. From a legal perspective, two options are possible: the assets can be transferred individually or via a spin-off under the German Transformation Act (Umwandlungsgesetz, UmwG). The latter offers the advantage of universal succession but is more complex in terms of form.
Summary
Innovative deal structures such as asset swaps, share-for-share transactions and carve-outs are more complex than traditional M&A models. They demand a deep understanding of legal, tax, operational, and — in the MedTech sector — regulatory and technical frameworks.
With careful planning, these structures offer MedTech companies significant advantages:
- enhanced strategic flexibility,
- targeted portfolio realignment,
- improved access to new technologies and digital capabilities,
- and reduced liquidity requirements compared to classic acquisitions.
In a sector defined by innovation cycles, regulatory hurdles and the need for continuous technological advancement, such transaction structures are valuable instruments to secure long-term competitiveness.
