CRE Strategies Could Help Preserve Value in Life Sciences Mergers & Acquisitions

While pharmaceutical companies acquire sponsor-backed biotech companies, corporate real estate teams are becoming more responsible for preserving the value of those deals, according to a new CBRE insight.

Even as acquired biotech firms tend to have smaller real estate footprints and leaner workforces, they become only partially integrated after the deal closes.

The result is a condition called stranding, which combines small footprints, high deal cadence and a lack of standard CRE processes for multiple acquisitions.

“Over time, this approach produces an expanding portfolio of unintegrated entities with different systems and processes,” CBRE said. “Financial reporting remains intact, but the operating model doesn’t fully absorb the acquired biotech”.

Signs of stranding include fragmented workplace management systems, lease renewals without portfolio-wide oversight, and inconsistent environmental and sustainability reporting. CBRE estimates that preventable real estate-related risks could amount to roughly 1% of deal value across serial acquisitions.

“For large organizations, this exposure compounds across acquisitions and can exceed $100 million over multiple years,” the report said.

Rather than taking the typical actions of operations consolidation or facilities closure, which are common following an M&A, CBRE recommends focusing on integration, adding that doing so “preserves the scientific momentum, team cohesion and operating distinctiveness of the acquired biotech, while making it operable within the enterprise.”

To accomplish this, the report outlines a playbook that includes documenting an acquired company’s real estate operations within the first 90 days after closing and conducting portfolio-wide reviews every 18 to 24 months. These actions can help identify integration gaps, prioritize improvements and create standardized operating procedures for future acquisitions.

CBRE explained that acquiring companies “have a limited window to institutionalize practices that protect value without disrupting the scientific engine that acquisitions are meant to preserve.”

Companies that put CRE integration best practices in place will be better able to protect long-term value, while reducing operational complexity and improving governance.