TECHNICAL & REGULATORY DUE DILIGENCE
In supplements and functional foods, the regulatory position is part of the valuation. Products can be selling well on claims that cannot be substantiated, under licences that do not transfer, made at sites that will not pass an audit, on formulas that cannot be manufactured anywhere else.
None of that appears in the financials. All of it changes what the business is worth.
WHAT FINANCIAL DILIGENCE MISSES
A quality of earnings review confirms that the revenue happened. It does not establish whether the revenue is defensible.
A claim that drives conversion but cannot be substantiated is a revenue line with an enforcement risk attached to it.
A licence held by a departing founder, a formula owned by the contract manufacturer, or a site that has never been audited are each a problem that surfaces after closing rather than before it.
WHAT WE EXAMINE
Every claim across the portfolio, on pack, on site, on listings and in trade material, assessed against the evidence actually held. Where revenue depends on a claim that will not survive scrutiny, that is a valuation issue rather than a compliance one.
What is held, in whose name, for which activities, and whether any of it transfers on a change of control. Licences held personally or by an entity outside the transaction are a recurring and expensive discovery.
Who owns the formula, whether it can be made anywhere other than the incumbent manufacturer, and what a transfer would actually require. A product that only one site can make is a product with one supplier and no negotiating position.
Audit history, GMP evidence, foreign site documentation, and whether the sites in use would withstand inspection today rather than when they were selected.
Specifications, release testing, complaint handling, adverse event records and any history of recall or enforcement. Gaps here are both a liability and an indication of how the business has been run.
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Market portability
Whether the portfolio can be sold where the growth case assumes it will be sold, or whether reformulation, relabelling and re-registration sit between the plan and the market.
WHAT YOU RECEIVE
Each finding classified by severity and by whether it is correctable, with the remediation scope estimated so the technical position can be priced alongside everything else.
A written report by product and by issue, with each finding classified by severity and by whether it is correctable.
Estimated remediation scope for each material finding.
Identification of anything that blocks a transaction as structured rather than merely costing money afterwards.
An assessment of the growth case against what the regulatory position actually permits.
A prioritised remediation plan for the first year of ownership.
Availability for questions during negotiation.
WHO ENGAGES US
Buyers
Private equity, strategic acquirers and lenders who need the technical position priced before committing.
Sellers
Founders and boards preparing for a process who would rather find and fix these issues themselves than have them discovered and discounted.
Send what you have, under NDA. Data rooms are incomplete at this stage as a matter of course, and the gaps are usually the most informative part of the read.