Risk and Return

Originally Published MX July/August 2005

EDITOR'S PAGE

To reward long-standing investors and develop new routes for growth, medtech companies depend very heavily on being acquired by other organizations. But mergers and acquisitions are inherently risky transactions. A lot of things can go wrong to make a deal go sour, and even completed agreements have no guarantee of success.

Executives who want to make their deals succeed must work hard to set the groundwork. Sellers must ensure that their financial and regulatory affairs are in order. Buyers must conduct extensive due diligence to verify that they will receive appropriate value for their investment.

But sometimes even the best-crafted deals can be overtaken by events. That's one view of the recent disclosures and product recalls affecting Guidant Corp. (Indianapolis), which is in the midst of being acquired by Johnson & Johnson (New Brunswick, NJ) for an industry record $25.4 billion (see Business News).