MoneyLion: $87.38
Deal Size: $1 Billion
Market Cap: $970.02 M
When we wrote about the contingent value right (CVR) included in the Poseida (PSTX) deal in the first Merger Arbitrage Mondays post of December, we highlighted how CVRs are a common occurrence in various biotech transactions.
CVRs are common in biotech deals, where a company is acquired for its drug pipeline, and payments are made later if specific milestones are met. I’ve been involved in deals with CVRs as a bonus, where investors can earn additional payments after the deal closes if certain goals are achieved. The key to valuing a CVR is understanding the likelihood of milestones being reached, how long it will take, and adjusting for the time value of money.