Darshan Kulkarni explores why compliance isn’t just a side issue—it’s often the ultimate dealbreaker in pharma and biotech transactions.

When buyers look at acquiring a company in life sciences, they’re not just acquiring assets, patents, or promising pipelines. They’re also taking on the company’s regulatory baggage. If that baggage includes off-label promotion, billing fraud, improper trial oversight, or weak documentation, the deal could be dead on arrival.

Darshan explains how regulators—particularly the DOJ and FDA—expect compliance to be fully integrated into M&A due diligence. The DOJ’s Corporate Compliance Guidelines make it clear: compliance needs to be evaluated both before the acquisition and after the acquisition, because any lapses can lead to penalties, successor liability, or even personal liability for executives and investors.

He highlights that compliance red flags don’t just stall deals—they can change valuations, shift negotiation leverage, or cause buyers to walk away entirely. On the other hand, strong compliance systems can actually enhance a company’s attractiveness, helping reassure investors and acquirers.

Darshan also breaks down how OIG and FDA expectations, successor liability rules, and even global compliance standards all converge to shape the M&A landscape in life sciences. And for private equity? The message is simple: compliance isn’t a checkbox—it’s deal insurance.

The key takeaway? In life sciences M&A, compliance can make or break your investment. If you get it right, you buy not only a company but also credibility and long-term sustainability. If you get it wrong, you might inherit a regulatory nightmare that no deal price can fix.

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Brands often struggle to balance FDA cosmetic rules with FTC advertising standards. The FDA oversees labeling and determines whether a product is a cosmetic, drug, or soap, while the FTC enforces truth in advertising across all marketing. Claims like “clinically proven” require solid scientific evidence, and overreaching claims can trigger scrutiny from both agencies. For growing brands—especially those investing in digital marketing—regulatory compliance is essential. Aligning marketing claims with both excitement and credibility helps companies avoid enforcement risks, build consumer trust, and strengthen partnerships.

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Many clinical trial site leaders overlook critical risks hidden in physician employment agreements. These contracts often contain clauses that can expose sites to financial, legal, and operational danger if not carefully reviewed.

Key Risks to Watch Out For:

• Compensation Structures: Incentives tied to patient enrollment can raise anti-kickback and fraud concerns. Payments should reflect fair market value for time and expertise, not results.
  
  
• Data Ownership: If not explicit, investigators may claim ownership of trial data, patient lists, or publication rights. Agreements should clarify that the site owns study data and records.
  
  
• Non-Competes & Moonlighting: Overly broad restrictions may be unenforceable, while too weak protections allow PIs to compete directly. Clauses must be narrow, specific, and tied to legitimate business interests.
  
  
• Exit Strategies: Standard agreements often miss compliance safeguards. Sites need termination rights for events like loss of medical license, federal program exclusion, FDA disqualification, or protocol non-compliance.
  
  

Takeaway:
Physician agreements are not just HR paperwork—they determine a site’s survival. Poorly drafted contracts can act like ticking time bombs. Sites should ensure agreements protect data, comply with regulations, and safeguard operations.

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In this episode, host Darshan Kulkarni speaks with Joseph Keeney about speaker programs in the life sciences industry, exploring practical differences between small and large companies. They highlight that while fundamentals like compliance, pragmatism, and sound business principles apply across organizations, strong mitigating controls and adherence to legal and industry codes are critical.

Joseph explains the importance of engaging with various business units to understand real plans, aligning training programs with compliance needs, and avoiding pitfalls that could trigger violations of federal anti-kickback statutes. He emphasizes careful management of speakers bureau rosters, evaluating the necessity and effectiveness of healthcare professionals (HCPs) on the program, and considering fair market value while avoiding indirect remuneration risks.

The conversation also covers compensation approaches, proper documentation, and the value of third-party partners for benchmarking and compliance review. Joseph stresses that each program should be tailored to the company’s unique needs and highlights the importance of ongoing evaluation, diligence, and oversight.

Reach out to learn more.

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Darshan Kulkarni in conversation with Nella Bloom, for an in-depth discussion on the current state of small business transactions, private equity trends, and the challenges of advising clients in an unpredictable market.

Nella, an experienced attorney specializing in mergers and acquisitions and fractional general counsel services, explains how today’s business climate feels increasingly unstable. Rapid regulatory changes, unpredictable government responses, and evolving funding structures have made it difficult for lawyers and entrepreneurs alike to plan ahead. From shifting SBA lending rules to changing tax and formation requirements, she notes that the uncertainty affects every stage of dealmaking and business operation.

The conversation then turns to broader market trends. Nella has observed a rise in corporate bankruptcies, layoffs among highly skilled professionals, and a surge in individuals turning to entrepreneurship after losing traditional corporate jobs. Many of these professionals seek to launch consulting practices or small service-based companies, often entering a market filled with both opportunity and risk.

Darshan and Nella explore how private equity (PE) firms are reshaping the business acquisition landscape. While PE investors focus on maximizing profit and achieving lucrative exits within three to five years, owner-operators often prioritize legacy, continuity, and mission. This misalignment, Nella explains, can lead to misunderstandings and unmet expectations. Despite the allure of quick financial gains, she cautions that many sellers underestimate the long-term implications of selling to private equity — from loss of control to cultural shifts in the organization.

They also discuss why so many M&A deals underperform or fail to deliver on their projected synergies. Miscommunication between buyers and sellers, unrealistic valuations, and differing definitions of success often lead to disappointment or even litigation. Nella emphasizes the importance of understanding key contractual elements such as non-competes, earn-out clauses, and payment contingencies — and how they can become major pitfalls if not carefully negotiated.

In one particularly insightful segment, Nella describes how non-compete agreements can unfairly bind small business owners, while private equity firms often face no reciprocal restrictions. She warns sellers to be vigilant and realistic about the legal and financial leverage they bring to the table.

Darshan and Nella close the discussion by reflecting on the emotional side of these deals — the excitement of potential growth, the fear of loss, and the difficulty of maintaining balance when passion meets financial pressure. Both agree that while private equity brings valuable resources and structure, small business owners must enter negotiations with clear goals, legal protection, and a firm understanding of what success truly means for them.

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When sponsors terminate a clinical trial early, research sites may face financial losses for preparatory or ongoing work. To mitigate this risk, contracts should explicitly guarantee payment for all work performed up to the termination date, as well as reimbursement for non-cancellable expenses such as IRB fees, recruitment advertising, and staff training. Including a wind-down clause ensures compensation for necessary closeout activities—such as patient chart reviews, final visits, and data queries. Sites may also consider negotiating a minimum payment guarantee if termination occurs within the first 6–12 months and requesting upfront payments to offset early-stage costs. These protections help ensure that early termination does not disrupt site operations or financial stability.

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Pharmaceutical chatbots are increasingly used to answer patient drug questions, but they carry significant regulatory and compliance risks. While the FDA has issued guidance on AI in drug development and medical devices, it does not yet provide a framework for patient-facing drug Q&A. That means chatbots that discuss side effects, dosing, or interactions exist in a gray zone, and any missteps could trigger FDA enforcement.

The FTC enforces truth in advertising and consumer protection. Misleading claims, impersonating a doctor, or offering unverified information can lead to investigations. Some states, like Illinois, Nevada, Utah, and New York, are adding additional requirements such as licensed supervision or mandatory disclosures.

The OIG and DOJ are also paying attention. If a chatbot steers patients toward off-label use that affects Medicare or federal healthcare claims, it could lead to fraud investigations. The DOJ’s new healthcare fraud task force has already targeted AI misuse in healthcare.

Studies show chatbots provide inaccurate drug information 5–13% of the time, often with confidence, and sometimes at a reading level too high for many patients. These errors can misinform or even harm users, and regulators focus on outcomes, not intent.

Best practices include disclosing that the chatbot is not medical advice, avoiding personalized dosing recommendations, auditing responses, implementing escalation paths to live healthcare professionals, and ensuring privacy and HIPAA compliance. With proper oversight, tools like Ceres can help document disclosures and escalation pathways, keeping innovation safe and compliant.

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Companies must maintain thorough records to meet FDA inspection requirements, including safety substantiation files, labeling proofs, ingredient documentation, and adverse event logs. Adverse event logs must be retained for six years (three for small businesses), while registration and product listing records require annual updates. Organized, accessible, and up-to-date records are essential not only for compliance but also for growth, due diligence, and investor confidence. Compliance is a strategic asset: clean, well-maintained files position a company as scalable and acquisition-ready, turning regulatory diligence into a competitive advantage.

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