What Do I Need To Know About Contingent Value Rights?

After a brief dip in popularity in the Canadian public M&A market, contingent value rights, or CVRs, have seen renewed interest as acquirors and target companies look to bridge gaps on value attributable to a future milestone, asset or performance outcome. CVRs provide target shareholders with a contractual right to receive additional consideration post-closing if specified payment triggers are satisfied during their term; they are used to address circumstances where the parties agree on the base value of a company but disagree on specific (and contingent) drivers of value. 

While seen in public M&A transactions for decades, CVRs have increased in prevalence in Canadian transactions in the past two years, including in a number of recent significant Canadian transactions. CVRs have been used in transactions involving targets in a range of industries — technology, pharmacy, energy and mining — with payments based on a range of metrics, including post-closing financial or operational