Margins Are the Shock Absorber of Enterprise Value
McKinsey analysis shows that a one-point improvement in EBITDA margin can increase enterprise value by 8–12%, depending on industry and growth profile. For MedTech CFOs, that margin improvement is becoming harder to achieve — median EBITDA margins have fallen by 200–300 basis points in the past two years due to inflation, labor shortages, and cost-to-serve increases.
For CFOs, margin resilience isn’t just about survival — it’s about protecting enterprise value to EBITDA multiples that determine investor confidence and exit outcomes.
Three Margin Levers High-Performing CFOs Are Pulling
- Precision Pricing
Bain & Company finds that companies with dynamic, value-based pricing models see margins 2–4% higher than those using static models. Leading CFOs are equipping sales teams with deal-level margin guardrails to prevent erosion in high-volume accounts. - Cost-to-Serve Optimization
PwC’s 2024 Global CFO Survey shows that 71% of CFOs are redesigning service delivery models to cut non-revenue-generating costs while maintaining quality. This includes supply chain redesigns, vendor consolidation, and digitizing low-value processes. - Portfolio Rationalization
High performers are exiting low-margin product lines and reinvesting in scalable, high-margin offerings. This both protects gross margins and signals disciplined capital allocation to investors — directly supporting the enterprise value to revenue multiple.
Why Margin Matters to Multiples
Investors reward CFOs who can sustain or expand margins in volatile markets. This is because strong margins provide a buffer against shocks, enhance cash flow resilience, and reduce perceived risk — all factors that lift valuation multiples.
When margins slip, investors often adjust future growth expectations downward, leading to multiple compression. In MedTech, even a small erosion in margin can have an outsized impact on valuation due to high fixed cost structures.
NextAccel’s Margin Resilience Framework
From our work with CFOs in high-stakes industries, we’ve developed a structured approach to margin defense:
- Define – Identify margin leakage points across pricing, operations, and product portfolio.
- Deploy – Implement targeted initiatives to protect or improve EBITDA.
- Deliver – Track results in terms of valuation impact, not just percentage points.
