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Forensic Regulatory Assessment is Essential for M & A

Don’ Pay for Your Merger or Acquisition Over and Over Again!

Mergers and Acquisitions within the medical device community contribute to the vitality of the industry, but far too many companies think only of forensic accounting. The newly merged company has enough to do without contending with the residual product liability and potential FDA consent decrees because no one looked at the documents in the corner! Systemic regulatory negligence is not simple to correct but at least you can factor it into your purchase agreement.

For M & As in the medical industry, a forensic regulatory assessment could identify potential gaps in medical device compliance within the quality system, documentation and marketing claims which could be passed forward to the “NEWCO.” Forensic regulatory assessment during acquisitions or mergers due diligence requires far more than “auditing” an existing quality system or going through FDA filings. Forensic regulatory reveals what is not supposed to be seen.

A successful forensic regulatory assessment involves a “look back” technique that can reveal flaws in the foundation with potential impact on the future. Regulatory forensic assessment requires the skill to identify the gaps in regulatory and engineering historical documentation and how these may affect your future. Systemic practices of benign neglect are just as damaging to the future merger or acquisition as might be overt avoidance of compliance. What the NEWCO will need to know is whether or not these deficits could be fuel for litigation and/or FDA consent decree. Your acquisition has a timetable, and you need to find these gaps fast.

Over the last decade medical device companies have been burdened with constantly changing “guidance” documents, revised interpretation of regulations, conflicting regulations between jurisdictions, and constantly revolving international standards. While chasing these changes, has the regulatory record of the candidate kept pace? Have the best decisions been made when qualifying new products or chasing down a nonconformance? Nearly all medical device products have current technology foundations built on top of old. Applications of new products in new jurisdictions place pressure on regulatory departments and even regulatory consulting companies are hard pressed to keep it all straight while meeting deadlines. Has the target of your merger or acquisition been diligent where it counts, or were shortcuts taken due to financial stress? What may linger in the record to drag your good intentions into the mire?

There are numerous examples of acquisitions where the merger was paid for again and again, long after the purchase was completed. To help you to avoid merger remorse, contact Paladin Medical, Inc. and talk about how we can help you to mitigate the regulatory risks of your new venture.