What is a contingent value right (CVR)?

A contingent value right, or CVR, is a promise of a further payment, in cash or sometimes shares, after the deal closes. It pays only if a stated event happens in time.

Say Woodgrove buys Litware for $50.00 a share in cash, plus one CVR per share. The CVR pays $5.00 if Litware's new drug is approved by December 31, 2027.

If the approval comes in time, each CVR pays $5.00. If it doesn't, the CVR ends and pays nothing.

The CVR comes on top of the offer, here the cash price. In some deals the closing payment includes shares too. Together they make up the deal's consideration.

A CVR helps when buyer and target disagree on what an uncertain event is worth. The buyer pays more only if the event happens.

CVRs are often used when a drug company is bought. The payment then depends on an approval or a trial result. Some pay on money instead, such as revenue above a set level.

In public company deals, 27 completed or pending deals in 2025 included a CVR, as of early December. Completed deals with one numbered 9 in 2022, 18 in 2023 and 7 in 2024.

A separate CVR agreement sets the terms. These are the parts to look for:

The event

What must happen, often called the milestone: a drug approval, a trial result or a revenue level, for example. The agreement defines it in detail.

The deadline

The date the event must happen by. If the date passes first, that milestone usually pays nothing. Other payments may remain, depending on the agreement.

The amount

A set sum per CVR, or a formula, such as a share of revenue. Some pay part for each milestone met; others pay only if every milestone is met.

The buyer's effort

After closing, the buyer runs the business. Many CVRs require commercially reasonable or diligent efforts toward the event.

Trading

Some CVRs are listed and trade on an exchange. Most recent ones can't be traded, so holders wait for any payment.

Any payment comes after closing, often years later.

Bristol Myers Squibb bought Celgene in November 2019. Each Celgene share received $50.00 in cash, one Bristol Myers Squibb share and one CVR.

The CVR would pay $9.00, but only if the FDA, the US drug regulator, approved three drugs in time. Two approvals were due by December 31, 2020, and the third by March 31, 2021.

One of the first two, liso-cel, wasn't approved by December 31, 2020. So the CVR ended on January 1, 2021, and paid nothing.

The FDA approved liso-cel in February 2021, weeks after the deadline.

The CVRs traded on the New York Stock Exchange. Bristol Myers Squibb valued each at $2.30, based on its first trade on November 21, 2019.

CVRs usually go to the holders whose shares are bought or converted in the deal. A holder who sells before then usually doesn't receive them.

The cash price is fixed; the CVR payment isn't. It can pay in full, in part or nothing, depending on its terms.

What the CVR will pay stays uncertain until the event happens or the deadline passes. It can stay uncertain a while longer, as results are worked out.

The list shows the most the CVR can pay per share, as the filing states it. It may pay less, or nothing, if its conditions aren't met.

It sits beside the offer as +CVR, as a tag, and as the last protection dot. The spread and the annualized spread leave it out: they count the cash alone.