The first article in a two-part series, The Boston Consulting Group (BCG) explores the financial rationale driving the steady trend of M&A activity in the medical technology sector-as well as the business implications that result. Here, the authors examine the phenomenon of external players-industrial companies, conglomerates and others-acquiring companies and entering the medtech sector. The series draws on the valuation techniques, used by BCG's ValueScience Center, which combine proprietary discounted cash flow and relative valuation multiple models.