Seller-Financed Deals Disfavored in Pharma

The biotech and pharmaceutical industries saw a resurgence in mergers and acquisitions activity last year, with the announcement of 46 listed biotech deals valued at over $100 billion—the highest volume since the industry’s spending peak in 2019.

2023’s rally highlights the increasing strategic importance of acquisitions in driving growth and innovation across the pharma sector. A closer look at the consideration types used in last year’s deals shows that cash-funded deals eclipsed seller-financed deals.

Despite the advantages associated with seller-financed deals (i.e., acquirers don’t have to deplete their own cash reserves, allowing them to maintain liquidity for future investments), Bloomberg Law Deal Analytics data establishes that seller-financed deals within the pharma M&A space have been largely unpopular over the past year. The data shows that out of 1,687 pharma M&A deals announced between September 2023 and September 2024, there was only one seller-financed pharma M&A deal.

In contrast, there were 1,247 all-cash pharma M&A deals announced between September 2023 and September 2024—comprising 73.9% of the pharma M&A deals for that period. The other 439 deals include stock; cash and stock; cash or stock; cash and debt; cash, stock, and debt; and stock and debt deals.

One explanation for the glut of all-cash deals is the amount of cash in hand: The world’s top 20 pharmaceutical firms by revenue held cash and cash equivalents of more than $110 billion among them at the end of 2023. This strong liquidity has enabled pharma firms to fund acquisitions directly from their balance sheets and has given financial institutions the confidence to back all-cash pharma M&A deals.

Another impetus for all-cash deals—which typically close faster because they don’t usually involve extended negotiations and valuations more common in other deal structures—is this year’s US presidential election. Companies were likely trying to close dealsbefore the volatility that has come to be associated with election time.

While all-cash deals don’t seem to be slowing down for pharma M&A anytime soon, Bloomberg Law’s Deal Analytics M&A tool can be used to see if any other seller-financed deals show up in the remainder of the year.

GENERATE THE DATA

To replicate the research that was used for this article:

1. Visit Bloomberg Law’s Deal Analytics page (Bloomberg Terminal subscribers: Run BLAW OUT <GO> and search for “MA”).

The Deal Analytics M&A tool provides over 25 searchable fields that have information on more than 100,000 public and private M&A, investment, private equity, and venture capital deals from around the world.

2. To view data on all-cash pharma M&A deals, click the Consideration filter, select the drop-down and choose “Cash”. (Select “Debt” to view data on seller-financed pharma M&A deals.)

3. Navigate to the Industry Sector filter, click “Select Options”, and type “Pharmaceuticals” (or the industry of your choice). Then select any applicable industry categories.

4. Click the Date filter, select the second drop-down, and scroll over to “Date Range” (or select the first drop-down to view transaction milestone dates).

5. Enter the desired dates and click “Search” to view results.

6. Download the records into a spreadsheet format by clicking “Export to Excel” in the top right corner above the results.

The resulting spreadsheet file can be used to analyze data on pharma M&A deals by filtering the related industry, dates, and consideration types.

Bloomberg Law subscribers can find related content on our Deal Analytics resource, as well as on our Mergers and Acquisitions page.

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