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Key Takeaways:
- CVR usage surged from 7 publicly disclosed deals in 2024 to 27 deals in 2025, with some CVRs representing over 70% of total deal value.
- Earnouts appeared in 89% of private biopharma deals that closed between mid-2023 and mid-2025, generally consistent with 91% in the prior two-year period, and in 84% of medical device deals that closed between mid-2023 and mid-2025, up from 59%, in the prior two-year period.
Overview
Life sciences M&A activity surged in 2025, with PitchBook reporting 179 deals. Biopharma transactions totaled approximately $124 billion and medtech transactions reached approximately $61 billion for the full year. That momentum continued into Q1 2026, with $40.9 billion in biopharma M&A (up from $25.2 billion in Q1 2025) and $26.6 billion in medtech M&A (up from $8.3 billion in Q1 2025). Yet deal structures have shifted materially: milestone-heavy consideration now dominates more than ever and upfront consideration continues to shrink.
Contingent value rights (CVRs), which pay shareholders a defined amount upon achievement of post-closing milestones, have driven much of this shift. As reported by Deal Point Data, CVR usage surged from 7 public deals in 2024 to 27 in 2025, with prominent examples including Pfizer’s acquisition of Metsera and Roche’s $3.5 billion acquisition of 89bio. In some cases, the CVR component has far exceeded the upfront payment. The consideration in Eli Lilly’s acquisition of Adverum was comprised of $3.56 per share in cash paid at closing, plus a CVR of up to $8.91 per share (approximately 71% of total potential consideration), tied to regulatory approval and commercial sales milestones.
These trends are not limited to public transactions. While CVRs are typically associated with public-company deals, similar milestone-based economics appear in private life sciences transactions through earnout structures. The 2025 SRS Acquiom Life Sciences M&A Study, which analyzed 466 private-target life sciences acquisitions that closed between mid-2023 and mid-2025, found that earnouts appeared in 89% of private biopharma deals, generally consistent with 91% in the prior two-year period, and in 84% of medical device deals, up from 59%, in the prior two-year period. Across 342 private life sciences deals with an earnout, aggregate earnout potential totaled approximately $95 billion, yet only 9.5% of that potential has been paid to date. The gap between potential and actual payouts highlights just how much deal value now hinges on post-closing milestone achievement.
The upcoming patent cliff is creating urgency for acquirers to replenish pipelines, with the US drug market set to lose over $230 billion in revenue between 2025 and 2030 due to patent expirations. CVRs bridge this gap, allowing acquirers to offer competitive headline prices while deferring consideration to milestone-contingent payouts. For sellers, announced deal values are increasingly aspirational rather than guaranteed, making the probability-weighted expected value of contingent structures the critical metric in evaluating bids.
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