M&A - Who owns legacy data?
M&A is the new normal for Life Science companies, driving innovation and growth; the capability to successfully integrate or divest businesses is a major source of competitive advantage. The industry has seen major acquisitions in recent years, with the Top 20 transaction volumes between $10 and $70 billion USD.
When looking at these acquisitions in more detail, we see different acquisition scenarios:
- Transition of the complete ownership of companies
- Acquisition and integration of specific divisions, selected markets or regions
- Individual product lines, products or manufacturing sites
In every scenario, companies are obligated to retain critical legacy data to comply with legal, tax and regulatory requirements. This important topic must be clarified during negotiations to avoid any uncertainty in future when the deal is closed:
- Should the legacy data be transferred to the buyer’s systems?
- Should the legacy data be managed or archived, and be provided as a service by the seller?
- What is the scope of the data, by functional area (e.g. Manufacturing, Quality, Distribution, Finance, Controlling, HR) and by geography?
To make the right decisions it is critical to do a Data Retention Risk Assessment at an early stage that considers:
- Legal, tax and regulatory requirements by market in scope
- Market Authorization Transfer (MAT) and transition periods
- Seller’s system landscape
- Storage of data including archiving
- Collaboration scenarios with external supply chain partners like contract manufacturers and logistics service providers
The right strategy to data retention can help avoid fines, saving both the seller and the buyer millions of dollars. Not to mention, saving companies from the potential negative impacts on image and reputation. An industry-typical example is a product recall down to patient level: It is important that both companies are properly prepared to provide a full batch genealogy including all manufacturing and distribution records, in the worst case, even if the impacted batches were manufactured years ago in the legacy environment. Providing such data can be simple, if all legacy systems and all data records are transitioned to the buyer (transition of the complete ownership of a company), but can be highly complex if only specific product lines, products or manufacturing sites are acquired, and critical data cannot be easily extracted, validated, and migrated into the buyer’s systems.
Looking at the example of a batch recall down to patient level, we have implemented the following data retention strategies for our clients:
- Full migration of batch genealogy into the buyer’s production systems
- Partial migration of batch data
- Zero migration of batch data, setting up a Transitional Service Agreement (TSA) between buyer and seller, ensuring critical data is provided for critical events by the seller within a predefined timeframe
The more complex the deal is, the more challenging the data retention strategy and integration is. This especially holds true when processes and data on the seller’s side were not setup or prepared for the foreseen divestment. Companies must not underestimate Data Retention when considering a successful integration of businesses.
Tenthpin Management Consultants are the experts for Data Retention in the Life Science industry. With our broad industry experience and a proven track record we develop and deliver best-in-class Data Retention strategies for companies:
- We are familiar with the different acquisition scenarios and their impacts.
- We understand the challenges in collaboration between business partners involved including legal language like Transitional Service Agreements (TSA), Transitional Distribution Services Agreements (TDSA), Manufacturing, Supply and Distribution Agreements (MSDA) including Marketing Authorization Transfer (MAT) and Sales and Purchasing Agreements (SAPA).
- We are familiar with legal, tax and regulatory requirements.
- We have deep, unparalleled expertise with data along the whole Life Science value chain, from the manufacturing shop floor to the lab, from the warehouse to the patient.
- We provide high-quality Data Retention Risk Assessments.
- We understand technical options to migrate and store data.
- We design smart solutions to store and display legacy data that is more user friendly.
- We deliver your Data Retention projects successfully, on time, within budget and in quality.
Contact our industry experts at Tenthpin Management Consultants if you would like to learn more.