Both in the private equity and trade buying space, regulatory change is the primary driver of volatility in the market. However, traditionally in M&A transactions, financial, legal and commercial considerations have taken precedence over regulatory considerations. Failure to perform robust regulatory / FDA Compliance due diligence is not an option in today’s regulatory environment and can lead to unknown liabilities materializing after the deal.
The benefit MEDVACON provides is very unique and the service we offer is critical during the due diligence phase. During this time, we conduct inspections and audits of the company’s FDA regulated systems. This may include warehousing, manufacturing, packaging, distribution, supply chain, all supporting computer systems, Quality Management Systems, etc. The reason this work is so important is because many organizations ignore this area during the due diligence phase and then are surprised later when issues in the system are flawed and they have to pay six or seven figure fee’s to rectify the issues. This becomes especially critical (and more expensive) if these gaps are found during an FDA audit. By identifying these issues ahead of time the cost and impact of remediation could be factored into the offer placing the acquiring company in a better financial position. This approach and work also provides the company with a detailed report as to the critical issues that must be addressed. This initiative also serves another purpose, if the FDA does inspect, the fact that the issues were identified and plans were in place to remediate the issues, places the company in a more defensible position and provides it with time to address the items identified. In addition to conducting the assessment, MEDVACON provides the expertise to help the organization remediate any gaps and achieve compliance.
By ensuring a robust approach to regulatory due diligence, firms can gain a host of benefits. Throughout the process of an acquisition and while taking into consideration the factors mentioned above, firms should constantly reflect on whether their due diligence process (and the deal itself) facilitates: