Early upfront share deals represent an attractive exit strategy for venture-backed biotech companies and their institutional investors. This M&A transaction usually involves an initial upfront purchase price payment upon signing combined with future milestone payments.
Founders and institutional investors in the field of drug development find themselves in an increasingly competitive environment. Today's equity financing rounds involve very large funding volumes even in early stage companies and biotechnology companies are often financed by international syndicates in order to safeguard both, the quality and the speed of drug development. This makes exit strategies increasingly important. Driven by the profitability targets of their investment funds, successful VC investors are looking for an early cash event in the portfolio of their investee companies. The early upfront share deal represents the go-to exit strategy.