AMETEK, Inc. (NYSE: AME) announced it has entered into a definitive agreement to acquire Paragon Medical, a provider of highly engineered medical components and instruments, from affiliates of American Securities in an all-cash transaction valued at approximately $1.9 billion.
Medical Device CDMO / Components EBITDA Multiples
With annual sales of approximately $500 million and reported EBITDA margins of approximately 25%, the deal (preliminarily) implies multiples of 3.8x revenue and 15.2x EBITDA for the medical device contract development and manufacturing organization (CDMO). This is the third time Paragon Medical has changed hands since 2018:
In May 2018, NN, Inc. acquired Paragon for a base price of $375 million that was later adjusted to $377.3 million net cash acquired. According to an NN investor presentation, Paragon generated 2017 revenue of $141 million of revenue and EBITDA of $24 million (EBITDA margin ~17%), implying multiples of 2.7x and 15.7x revenue and EBITDA, respectively. At the time, NN expected to realize synergies that would decrease the multiple to 9.3x EBITDA, implying about $40 million of synergy adjusted EBITDA.
Paragon was likely combined with existing NN operations to form its life sciences division, which was then divested to American Securities in August 2020 for $825 million, consisting of $755 million cash and the remainder in an earnout, implying a 12.5x multiple of estimated 2020 EBITDA (according to the investor presentation). In the twelve months ended June 30, 2020, the NN life sciences division generated revenue of $338 million, implying a revenue multiple of 2.4x.
Other Medical Device CDMO Deals
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The Scope Research Healthcare M&A Valuation Database currently has financial details for 258 medical device deals going back to 2010, 132 of which include reported EBITDA multiples. The medical device M&A deals can be purchased individually, while our affordable annual subscriptions provide access to all of our healthcare M&A databases and segments, updated continuously.
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