2025 to First-Half 2026 Marks a Breakout Time for CVRs

Sally Wagner Partin and Sharon Flanagan look at the results of Sidley’s latest survey of contingent value rights (“CVRs”), analyzing recent trends in life sciences public M&A and finding a record share of deals using a CVR, particularly in biopharma and also increasingly in medical devices.

CVRs are now a recurring feature of life sciences M&A, used to bridge valuation gaps and allocate regulatory and commercial risk. Deals using CVRs are getting larger, and contingent payouts are growing — while post-closing discretion increasingly tilts toward buyers.

Three years ago, Sidley’s inaugural survey of CVRs documented the reemergence of CVRs in public life sciences M&A. Our third survey, published this month, found that 2025 marked CVRs’ biggest year yet. Although CVR frequency moderated in the first half of 2026, the deals that include CVRs are among the largest on record, with five of the largest CVR transactions we have surveyed announced in 2026.

Key findings of Sidley’s latest survey of CVRs, which covers the period January 1, 2021 through June 30, 2026, with a focus on developments and trends since our last survey, are that:

• 2025 saw highest usage of CVRs. 2025 was the breakout year for CVR usage, with the highest-ever annual count and share of deals using a CVR. A record 28 of 59 announced public life sciences transactions (approximately 47%) included a CVR. Approximately 24% of announced life sciences transactions in the first half of 2026 included a CVR.
• Biopharma continues to drive CVR use. CVR use was even more concentrated in biopharma, where over half of announced public biopharma transactions in 2025 (approximately 56%) utilized a CVR.
• Use rising in larger deals. More than a third (approximately 37%) of the $1 billion-plus life sciences CVR deals in our full dataset (going back to 2008) were announced in 2025 and the first half of 2026. Moreover, nearly half of all life sciences CVR deals above $3 billion were announced in 2025 and the first half of 2026, with two additional CVR deals over $3 billion announced since June 30, 2026.
• Contingent portion of deal value is getting larger. Excluding seven high-value outliers, the maximum potential CVR payouts in deals announced since 2021 averaged 34% of upfront consideration, with a median of 24%. In 2025, CVRs came in above both figures, with an average of 39% and a median of 27%.
• Surge in CVRs in medical device deals. While biopharma remained the key sector using CVRs, 2025 also saw a rise in the use of CVRs in the medical device sector, where historically deals have seen less use of them.
• Life sciences continues to dominate the public CVR landscape. Of the 1,199 public deals announced across all industries since 2021, only 77 (approximately 6%) included CVRs, and approximately 92% of those were in the life sciences industry.
• Every life sciences CVR announced since 2021 was event-driven. Sales/use and regulatory milestones together accounted for 74% of milestone types.
• CVRs typically have fewer milestones than those seen in private company deals. Approximately 75% of the CVRs in life sciences transactions announced since 2021 provided for only one or two milestones.
• Post-closing efforts tipped in buyers’ favor. Efforts remain a central negotiation point, particularly in light of recent high-profile litigation over whether buyers satisfied their diligence obligations. Between 2021 and June 30, 2026, objective standards for efforts declined, while buyers increasingly disclaimed efforts obligations altogether.

Overall, the survey shows that CVRs remain an important component of deal structuring, particularly in a demanding financing and regulatory environment. Whether 2025’s record pace resumes and whether buyer-favorable terms persist as financing markets and M&A conditions evolve are questions we will revisit in our next survey. Other important questions are likely to be how CVRs will be used in larger transactions and whether post-closing standards continue to shift toward greater buyer discretion.

Further detail on the survey’s findings and its methodology can be found here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.