case study

Pre-Acquisition Technical Due Diligence

A private equity firm was negotiating to purchase an established medical device company. Regulatory Compliance Associates Inc. was contracted to provide a technical due diligence analysis of facilities, manufacturing, quality, and regulatory systems, as well as the technical infrastructure.

About RCA
Regulatory Compliance Associates® Inc. (RCA) provides worldwide services to the pharmaceutical, biologic, sterile compounding, biotechnology, and medical device industries for resolution of compliance and regulatory challenges.

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Pre-Acquisition Technical Due Diligence

Background

A private equity firm was negotiating to purchase an established medical device company. Regulatory Compliance Associates® Inc. (RCA) was contracted to provide a technical due diligence analysis of facilities, manufacturing, quality, and regulatory systems, as well as the technical infrastructure.

RCA planned and executed the due diligence process against a tight timeline.

Result

RCA identified key business, technical, regulatory, and quality issues impacting the deal. The issues were risk mapped with remediation recommendations and accordant costs. The client used this data to discount the purchase price, negotiate escrow funds, and understand the way forward after deal closure.

Approach

RCA planned and executed the due diligence process against a tight timeline. Regular communications were established with the client and other external due diligence teams, including legal, IT, and insurance.

  • For each area of technical focus, checklists and cross-functional items were determined to ensure proper organization and thoroughness of the process
  • An advance team conducted a preliminary evaluation, requested documents, and prepared the target site for the specialized due diligence team
  • Due diligence was conducted at both domestic and international sites, and a report was submitted that included estimated cost to remediate the issues
  • Post-report meetings with the client discussed risks, costs, potential action plans, and impact on deal negotiations

Challenge

Under time constraints and with limited access to information, RCA needed to identify the compliance, regulatory, technical, and operational risks associated with the pending purchase. RCA also was charged with identifying remediation costs that could be used during deal negotiations.

References

  1. FDA Code of Federal Regulations, Title 21, Part 820, “Quality System Regulation,” April 1, 2010.
  2. International Standards Organization, ISO Standard 13485: Medical devices—Quality management systems—Requirements for regulatory purposes. Second Edition, July 15, 2003.

Background

A private equity firm was negotiating to purchase an established medical device company. Regulatory Compliance Associates® Inc. (RCA) was contracted to provide a technical due diligence analysis of facilities, manufacturing, quality, and regulatory systems, as well as the technical infrastructure.

RCA planned and executed the due diligence process against a tight timeline.

Result

RCA identified key business, technical, regulatory, and quality issues impacting the deal. The issues were risk mapped with remediation recommendations and accordant costs. The client used this data to discount the purchase price, negotiate escrow funds, and understand the way forward after deal closure.

Approach

RCA planned and executed the due diligence process against a tight timeline. Regular communications were established with the client and other external due diligence teams, including legal, IT, and insurance.

  • For each area of technical focus, checklists and cross-functional items were determined to ensure proper organization and thoroughness of the process
  • An advance team conducted a preliminary evaluation, requested documents, and prepared the target site for the specialized due diligence team
  • Due diligence was conducted at both domestic and international sites, and a report was submitted that included estimated cost to remediate the issues
  • Post-report meetings with the client discussed risks, costs, potential action plans, and impact on deal negotiations

Challenge

Under time constraints and with limited access to information, RCA needed to identify the compliance, regulatory, technical, and operational risks associated with the pending purchase. RCA also was charged with identifying remediation costs that could be used during deal negotiations.

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