Navigating Due Diligence: Scope an M&A Transaction for Clinical Trial Sites

When it comes to mergers and acquisitions (M&A), particularly in the clinical research industry, a well-defined scope for due diligence is essential to ensure a smooth transaction. Understanding the regulatory and compliance landscape unique to clinical trial sites can make or break the deal. At the Kulkarni Law Firm -Clinical Research , we work closely with clinical trial sites to guide them through this complex process, ensuring their operations, financials, and compliance records stand up to scrutiny.

Why Scoping Matters in M&A Transactions

Scoping the due diligence process provides structure and focus, directing attention to high-priority areas such as compliance, operational risks, and regulatory obligations. A narrowly focused approach prevents unnecessary delays and the uncovering of issues unrelated to the key goals of the transaction.

In the case of a clinical trial site, the scoping process can help mitigate the risks associated with regulatory inspections, data privacy obligations, and research integrity while positioning the site as a valuable acquisition target.

Key Steps in Scoping Due Diligence for Clinical Trial Sites

1. Define Transaction Goals The first step is to clearly identify what both parties want to achieve. Are you acquiring the clinical trial site for its patient database, access to key investigators, or proprietary research protocols? These goals influence which areas of due diligence will require the most attention.
2. Identify Regulatory Hotspots Clinical trial sites operate under strict regulations from agencies such as the FDA, OHRP, and local IRBs. A due diligence scope should include a review of regulatory compliance records, including prior FDA inspection outcomes, corrective action plans (CAPAs), and adherence to GCP (Good Clinical Practice) guidelines.
3. Assess Contractual Agreements The scope should include a review of ongoing and past clinical trial agreements (CTAs), confidentiality agreements, and investigator contracts. These documents can reveal obligations that may extend beyond the acquisition, such as restrictive covenants or outstanding performance obligations.
4. Review Patient Data Privacy Compliance Clinical trial sites must comply with HIPAA, GDPR (if applicable), and other privacy regulations. Ensure the scope includes an evaluation of the site’s processes for safeguarding protected health information (PHI) and informed consent documents.
5. Evaluate Financial Health and Site Resources A thorough financial review is crucial, but for clinical trial sites, this should also cover patient enrollment metrics, investigator productivity, and pending sponsor payments. Identifying any financial bottlenecks early can prevent surprise liabilities.
6. Examine Litigation and Compliance History The scoping process must include a search for any ongoing or prior litigation, whistleblower complaints, or compliance investigations. This is especially critical if the site has previously been involved in multi-center studies where external parties may have raised concerns.
7. Operational Capacity and Site Capabilities Assess whether the site’s facilities, staffing levels, and equipment are adequate for current and future clinical trial commitments. This step helps identify potential gaps that could affect the site’s value post-acquisition.

Creating a Targeted Due Diligence Checklist

Based on the scope established, the due diligence team should develop a checklist tailored to the transaction. This list can include:

• Regulatory inspection reports (FDA 483s, warning letters, etc.)
• CAPA documentation
• Institutional Review Board (IRB) approvals and communications
• Copies of clinical trial protocols and amendments
• Contracts with sponsors and CROs
• Documentation related to data privacy practices and security measures

Conclusion: Positioning Your Clinical Trial Site for a Successful Transaction

Scoping due diligence for an M&A transaction involving a clinical trial site requires expertise in regulatory frameworks, financial analysis, and operational assessments. At the Kulkarni Law Firm, we specialize in representing clinical trial sites and ensuring they are thoroughly prepared for every stage of the M&A process. By defining clear goals and focusing on key compliance and operational areas, you can present a stronger case to potential buyers while minimizing the risk of delays or deal fallout.

If you’re considering a transaction involving a clinical trial site, contact us at Kulkarni Law Firm, P.C. to learn how we can support your due diligence process and help you achieve a successful outcome.