top ten legal considerations when investing in health care & life sciences
TRANSCRIPT
When Investing in HEALTH CARE AND LIFE SCIENCES COMPANIES
1. Understand the Short- and Long-Term Regulatory Landscape — Consider how changes and trends in the regulatory landscape (e.g., health care, privacy, antitrust, etc.) have had an impact on the target company’s technologies/businesses, and what impact they may have in the future.
2. Conduct An In-Depth Due Diligence Review — Conduct a thorough due diligence review to determine whether the target company is currently in compliance with all applicable laws (especially federal and state laws governing health care busi-nesses) and to identify any liabilities for non-compliance with anti-kickback, Stark, HIPAA and other obligations.
3. Follow the Money Trail — Understand the target company’s relationship with its payers or customers and carefully review such contracts for change-of-control, assignment and other provisions in connection with the proposed transaction.
4. Determine if the Data is Safe and Secure — Thoroughly audit the target company’s IT systems and practices to determine if patient and other data is being preserved and protected in accordance with applicable laws and standards.
5. Vet and Agree on a Deal Structure — Early in the process, the parties should properly analyze and vet the appropriate deal structure for the proposed transac-tion from a regulatory perspective to ensure it does not violate applicable health care regulations and laws (e.g., prohibition on the corporate practice of medicine, state licens-ing laws, anti-kickback regulations, Stark regulations).
6. Analyze Whether There Are Any Potential Antitrust Issues — Successful challenges to health care transactions are on the rise. Health care businesses considering combinations need to be aware of this developing trend and take steps to avoid government scrutiny and litigation.
7. Identify all Consents and Notices Required to Close the Transaction — Understand the process for and timing to obtain all approvals or consents to close the transaction and whether any licenses, permits or accreditations are impacted by the transaction.
legalConsiderations
Top 10
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8. Consider Your Exit — In evaluating the investment or acquisition, take into account how regulatory issues may dictate and limit certain post-closing exits for the investment.
9. Secure All Key IP Assets — Ensure the target company owns or has suffi-cient rights to all of the key intellectual property assets required in the business, and that adequate protection has been obtained for such rights through patent filings, established trade secret procedures, etc. Exclusive rights/ownership can be used to stave off competition and build value in the company, while freedom-to-operate with respect to core technologies is essential.
10. Finalize a Post-Closing Compliance Plan — Understand what the invested or acquired company’s post-closing compliance plan will be and the costs associated with the post-closing compliance plan.
Our Private Equity Practice
Our experience and connections help clients successfully raise capital and execute on deals in the middle market. We capture opportunities, manage risks and forecast and overcome the unexpected. Each stage of an investment cycle is multifaceted and complex. We specialize in forming and managing funds, representing funds in their investments, acting as general counsel for portfolio companies and resolving investment disputes. In 2013 we ranked as 4th “Most Active for Investment Funds” and 14th for “Private Equity & Venture Capital Deals” by Dow Jones Private Equity Analyst. As a leader in the middle market, we connect companies with investors through our NP Capital Connector program. We have made more than 1200 introductions to over 300 companies globally.
Health Care
The health care industry is in a state of constant reinvention and transformation. These changes, spurred in part by health reform, create an extremely complex landscape that presents as many opportunities as it does challenges. Our cross-disciplinary team tracks the trends that impact delivery, cost, access and quality of health care. As an unrivaled leader in an industry facing unparalleled challenges, we specialize in health care delivery, corporate organization, government programs, emerging payment programs, managed care models and a vast array of other cutting edge issues.
Life Sciences
The global life sciences industry is advancing rapidly. Increased generic competi-tion, the changing patent landscape, evolving regulations, and pricing pressures present new challenges and opportunities for companies across the sector. Our cross-disciplinary team can steer you through every phase of your life cycle, helping you carefully consider all of your options, and execute effective growth strategies—whether through licensing, M&A deals, or other types of transactions.
For more information, Please contact:
Richard F. Langan, Jr., partner 212-940-3140 [email protected]
David A. Martland, partner Practice Group Leader, M&A and Corporate Transactions 617-345-6145 [email protected]
Michele A. Masucci, partner Practice Group Leader, Health Care Chair, Life Sciences Practice 516-832-7573 [email protected]
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