When mergers and acquisitions intersect with clinical trials, due diligence becomes a crucial step in ensuring a successful transition. In this insightful discussion, Darshan Kulkarni and Edye Edens explore the key legal and operational considerations when acquiring or merging with clinical research entities, including sponsors, sites, and CROs.
A major focus of the conversation is understanding the risks associated with clinical trial sites. Many private equity investors are actively looking to acquire research sites, but without proper planning, these deals can present significant challenges. One of the biggest concerns is the departure of key personnel—often the very individuals who understand how the site operates. If a site owner exits without a succession plan, the entire operation could be at risk. Investors must assess whether there are trained personnel in place to sustain operations.
Ownership structure is another critical factor. The MSO (Management Services Organization) model is commonly used in healthcare acquisitions, but not all clinical research sites are structured this way. Some investors may assume that site acquisitions function like medical practice acquisitions, which can lead to compliance and operational gaps. Additionally, many site owners have handshake agreements with principal investigators (PIs) rather than formal contracts, posing risks when it comes to continuity and regulatory compliance.
From an operational standpoint, investors and sponsors need to evaluate where a site stands in its progression—its infrastructure, ability to handle feasibility audits, and experience in running trials. Conducting a thorough review of contracts, policies, and procedures is crucial. Beyond the high-level strategic risks, a deeper, on-the-ground audit of compliance and operational readiness is necessary to avoid unforeseen liabilities.
This discussion highlights the complexity of due diligence in clinical trial acquisitions. While this conversation only scratches the surface, it underscores the importance of a comprehensive review process. Investors, sponsors, and site owners must collaborate with legal and compliance experts to navigate these challenges effectively.
For a deeper dive into these issues, watch the full discussion or reach out to Kulkarni Law Firm for guidance.
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