January 27, 2025
Private M&A: The Return of the “Dual-Track” Approach in Biotech Deals
Cooley recently published its “2024 Life Sciences M&A Year in Review.” There’s plenty of good stuff in there, but I thought the section discussing the return of dual track process, whereby a seller pursues both a potential sale and an IPO simultaneously was particularly interesting:
2024 saw a return of the prevalence of dual-track processes for private biotech companies. This approach, combining M&A and initial public offering (IPO) preparations on parallel tracks, allows companies to maximize optionality in an uncertain market. As deals get smaller, mid- and late-stage biotech companies, some of which may have been planning to go public, increasingly become targets for acquisition by large pharmaceutical companies. Biotech M&A involving private company targets was actually up 17% by deal count and up 12% by deal value compared to the prior year.
The report notes that a target’s leverage on the sale side of a dual-track process depends a lot on the viability of the IPO alternative, and Cooley says that landscape for life sciences IPOs gained steam over the course of the year. With the IPO market expected to rebound more broadly during 2025, perhaps we’ll see the dual-track process make a comeback for sellers in other sectors in the near future.
– John Jenkins