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Opinions expressed by Forbes Contributors are their own.Richard Harroch, Contributor

By Richard D. Harroch and David A. Lipkin

Mergers and acquisitions typically involve a substantial amount of due diligence by the buyer. Before committing to the transaction, the buyer will want to ensure that it knows what it is buying and what obligations it is assuming, the nature and extent of the target company’s contingent liabilities, problematic contracts, litigation risks and intellectual property issues, and much more. This is particularly true in private company acquisitions, where the target company has not been subject to the scrutiny of the public markets, and where the buyer has little (if any) ability to obtain the information it requires from public sources.

The following is a summary of the most significant legal and business due diligence activities that are connected with a typical M&A transaction. By planning these activities carefully and properly anticipating the related issues that may arise, the target company will be better prepared to successfully consummate a sale of the company.

Of course, in certain M&A transactions such as “mergers of equals” and transactions in which the transaction consideration includes a significant amount of the stock of the buyer, or such stock comprises a significant portion of the overall consideration, the target company may want to engage in “reverse diligence” that in certain cases can be as broad in scope as the primary diligence conducted by the buyer. Many or all of the activities and issues described below will, in such circumstances, apply to both sides of the transaction.

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1. Financial Matters. The buyer will be concerned with all of the target company’s historical financial statements and related financial metrics, as well as the reasonableness of the target’s projections of its future performance. Topics of inquiry or concern will include the following:

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  • What do the company’s annual, quarterly, and (if available) monthly financial statements for the last three years reveal about its financial performance and condition?
  • Are the company’s financial statements audited, and if so for how long?
  • Do the financial statements and related notes set forth all liabilities of the company, both current and contingent?
  • Are the margins for the business growing or deteriorating?
  • Are the company’s projections for the future and underlying assumptions reasonable and believable?
  • How do the company’s projections for the current year compare to the board-approved budget for the same period?
  • What normalized working capital will be necessary to continue running the business?
  • How is “working capital” determined for purposes of the acquisition agreement? (Definitional differences can result in a large variance of the dollar number.)
  • What capital expenditures and other investments will need to be made to continue growing the business, and what are the company’s current capital commitments?
  • What is the condition of assets and liens thereon?
  • What indebtedness is outstanding or guaranteed by the company, what are its terms, and when does it have to be repaid?
  • Are there any unusual revenue recognition issues for the company or the industry in which it operates?
  • What is the aging of accounts receivable, and are there any other accounts receivable issues?
  • Should a “quality of earnings” report be commissioned?
  • Are the capital and operating budgets appropriate, or have necessary capital expenditures been deferred?
  • Has EBITDA and any adjustments to EBITDA been appropriately calculated? (This is particularly important if the buyer is obtaining debt financing.)
  • Does the company have sufficient financial resources to both continue operating in the ordinary course and cover its transaction expenses between the time of diligence and the anticipated closing date of the acquisition?

2. Technology/Intellectual Property. The buyer will be very interested in the extent and quality of the target company’s technology and intellectual property. This due diligence will often focus on the following areas of inquiry:

  • What domestic and foreign patents (and patents pending) does the company have?
  • Has the company taken appropriate steps to protect its intellectual property (including confidentiality and invention assignment agreements with current and former employees and consultants)? Are there any material exceptions from such assignments (rights preserved by employees and consultants)?
  • What registered and common law trademarks and service marks does the company have?
  • What copyrighted products and materials are used, controlled, or owned by the company?
  • Does the company’s business depend on the maintenance of any trade secrets, and if so what steps has the company taken to preserve their secrecy?
  • Is the company infringing on (or has the company infringed on) the intellectual property rights of any third party, and are any third parties infringing on (or have third parties infringed on) the company’s intellectual property rights?
  • Is the company involved in any intellectual property litigation or other disputes (patent litigation can be very expensive), or received any offers to license or demand letters from third parties?
  • What technology in-licenses does the company have and how critical are they to the company’s business?
  • Has the company granted any exclusive technology licenses to third parties?
  • Has the company historically incorporated open source software into its products, and if so does the company have any open source software issues?
  • What software is critical to the company’s operations, and does the company have appropriate licenses for that software (and does the company’s usage of that software comply with use limitations or other restrictions)?
  • Is the company a party to any source or object code escrow arrangements?
  • What indemnities has the company provided to (or obtained from) third parties with respect to possible intellectual property disputes or problems?
  • Are there any other liens or encumbrances on the company’s intellectual property?

3. Customers/Sales. The buyer will want to fully understand the target company’s customer base including the level of concentration of the largest customers as well as the sales pipeline. Topics of inquiry or concern will include the following:

  • Who are the top 20 customers and what revenues are generated from each of them?
  • What customer concentration issues/risks are there?
  • Will there be any issues in keeping customers after the acquisition (including issues relating to the identity of the buyer)?
  • How satisfied are the customers with their relationship with the company? (Customer calls will often be appropriate.)
  • Are there any warranty issues with current or former customers?
  • What is the customer backlog?
  • What are the sales terms/policies, and have there been any unusual levels of returns/exchanges/refunds?
  • How are sales people compensated/motivated, and what effect will the transaction have on the financial incentives offered to employees?
  • What seasonality in revenue and working capital requirements does the company typically experience?

4. Strategic Fit with Buyer. The buyer is concerned not only with the likely future performance of the target company as a stand-alone business; it will also want to understand the extent to which the company will fit strategically within the larger buyer organization. Related questions and areas of inquiry will include the following:

  • Will there be a strategic fit between the company and the buyer, and is the perception of that fit based on a historical business relationship or merely on unproven future expectations?
  • Does the company provide products, services, or technology the buyer doesn’t have?
  • Will the company provide key people (is this an acqui-hire?) and if so what is the likelihood of their retention following the closing?
  • What integration will be necessary, how long will the process take, and how much will it cost?
  • What cost savings and other synergies will be obtainable after the acquisition?
  • What marginal costs (e.g., costs of obtaining third party consents) might be generated by the acquisition?
  • What revenue enhancements will occur after the acquisition?

5. Material Contracts. One of the most time-consuming (but critical) components of a due diligence inquiry is the review of all material contracts and commitments of the target company. The categories of contracts that are important to review and understand include the following:

  • Guaranties, loans, and credit agreements
  • Customer and supplier contracts
  • Agreements of partnership or joint venture; limited liability company or operating agreements
  • Contracts involving payments over a material dollar threshold
  • Settlement agreements
  • Past acquisition agreements
  • Equipment leases
  • Indemnification agreements
  • Employment agreements
  • Exclusivity agreements
  • Agreements imposing any restriction on the right or ability of the company (or a buyer) to compete in any line of business or in any geographic region with any other person
  • Real estate leases/purchase agreements
  • License agreements
  • Powers of attorney
  • Franchise agreements
  • Equity finance agreements
  • Distribution, dealer, sales agency, or advertising agreements
  • Non-competition agreements
  • Union contracts and collective bargaining agreements
  • Contracts the termination of which would result in a material adverse effect on the company
  • Any approvals required of other parties to material contracts due to a change in control or assignment

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6. Employee/Management Issues. The buyer will want to review a number of matters in order to understand the quality of the target company’s management and employee base, including:

  • Management organization chart and biographical information
  • Summary of any labor disputes
  • Information concerning any previous, pending, or threatened labor stoppage
  • Employment and consulting agreements, loan agreements, and documents relating to other transactions with officers, directors, key employees, and related parties
  • Schedule of compensation paid to officers, directors, and key employees for the three most recent fiscal years showing separately salary, bonuses, and non-cash compensation (e.g., use of cars, property, etc.)
  • Summary of employee benefits and copies of any pension, profit sharing, deferred compensation, and retirement plans
  • Evidence of compliance with IRS Section 409A in connection with stock option issuances
  • Summary of management incentive or bonus plans not included in above as well as other forms of non-cash compensation
  • Likelihood of need for compliance with IRS Section 280G (golden parachute) rules in connection with any potential acquisition
  • Employment manuals and policies
  • Involvement of key employees and officers in criminal proceedings or significant civil litigation
  • Plans relating to severance or termination pay, vacation, sick leave, loans, or other extensions of credit, loan guarantees, relocation assistance, educational assistance, tuition payments, employee benefits, workers’ compensation, executive compensation, or fringe benefits
  • Appropriateness of the company’s treatment of personnel as independent contractors vs. employees
  • Actuarial reports for past three years
  • What agreements/incentive arrangements are in place with key employees to be retained by the buyer? Will these be sufficient to retain key employees?
  • What layoffs and resultant severance costs will be likely in connection with the acquisition?

7. Litigation. An overview of any litigation (pending, threatened, or settled), arbitration, or regulatory proceedings involving the target company is typically undertaken. This review will include the following:

  • Filed or pending litigation, together with all complaints and other pleadings
  • Litigation settled and the terms of settlement
  • Claims threatened against the company
  • Consent decrees, injunctions, judgments, or orders against the company
  • Attorneys’ letters to auditors
  • Insurance covering any claims, together with notices to insurance carriers
  • Matters in arbitration
  • Pending or threatened governmental proceedings against the company (SEC, FTC, FDA, etc.)
  • Potentially speaking directly to the company’s outside counsel

8. Tax Matters. Tax due diligence may or may not be critical, depending on the historical operations of the target company, but even for companies that have not incurred historical income tax liabilities, an understanding of any tax carryforwards and their potential benefit to the buyer may be important. Tax due diligence will often incorporate a review of the following:

  • Federal, state, local, and foreign incomes sales and other tax returns filed in the last five years
  • Government audits
  • Copies of any correspondence or notice from any foreign, federal, state, or local taxing authority regarding any filed tax return (or any failure to file)
  • Tax sharing and transfer pricing agreements
  • Net operating losses or credit carryforwards (including how a change in control might affect the availability thereof)
  • IRS Form 5500 for 401(k) plans
  • Agreements waiving or extending the tax statute of limitations
  • Allocation of acquisition purchase price issues
  • Correspondence with taxing authorities regarding key tax items
  • Settlement documents with the IRS or other government taxing authorities

9. Antitrust and Regulatory Issues. Antitrust and regulatory scrutiny of acquisitions has been increasing in recent years. The buyer will want to undertake the following activities in order to assess the antitrust or regulatory implications of a potential deal:

  • If the buyer is a competitor of the target company, understanding and working around any limitations imposed by the company on the scope or timing of diligence disclosures
  • Analyzing scope of any antitrust issues
  • If the company is in a regulated industry that requires approval of an acquisition from a regulator, understanding the issues involved in pursuing and obtaining approval
  • Confirming if the company has been involved in prior antitrust or regulatory inquiries or investigations
  • Addressing issues that may be involved in preparing a Hart-Scott-Rodino filing (if thresholds are met) and effectively responding to any “second request” from the Department of Justice or Federal Trade Commission
  • Considering Exon-Florio issues if the transaction involves national security or foreign investment issues
  • Other Department of Commerce filings if the buyer is a foreign entity
  • Understanding how consolidation trends in the company’s industry might impact the likelihood and speed of antitrust or regulatory approval

10. Insurance. In any acquisition, the buyer will want to undertake a review of key insurance policies of the target company’s business, including:

  • If applicable, the extent of self-insurance arrangements
  • General liability insurance
  • D&O insurance
  • Intellectual property insurance
  • Car insurance
  • Health insurance
  • E&O insurance
  • Key man insurance
  • Employee liability insurance
  • Worker’s compensation insurance
  • Umbrella policies

Good morning.  Bob Tillman (a member of Gerbsman Partners Board of Intellectual Capital) and I want to share with you information about Silicon Valley Bank. https://www.cnbc.com/2023/03/10/silicon-valley-bank-is-shut-down-by-regulators-fdic-to-protect-insured-deposits.html

This is an unprecedented announcement regarding Silicon Valley Bank. We understand that many technology, life science and medical device companies who have SVB deposits and credit lines may be impacted by this development. Even if deposits above the $250,000 FDIC coverage limit are paid in full, SVB credit lines will likely be unavailable. 

Bob and I anticipate greatly restricted availability of venture financing, as many venture firms are also SVB customers. Financings in progress will likely be delayed, as venture firms will re-evaluate their commitments. If you have technology, life science and medical device companies as customers, you can expect that many of these companies will have difficulties paying their bills. Lastly, other banks will be fearful of a similar fate, and will likely pull back from lending and from taking on new customers.

If your company of one of those affected, it is vitally important that you retain professional help immediately to prepare for CASH shortages. Gerbsman Partners has a decades long track record in negotiating with creditors in difficult and complex situations and restructuring prohibitive real estate and intellectual property leases.

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property, as well as maximizing value for Intellectual Property Patents. Since 2001, Gerbsman Partners has been involved in maximizing value for 118 technology, medical device, life science, solar, fuel cell, cyber security, consumer and digital marketing companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M & A Transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, New York, McLean, VA/Washington DC, Orange County, Boston, Europe and Israel.

Bob, Ken Hardesty and I, as well as the rest of the Gerbsman Partners team are available to strategize and develop action for maximizing and monetizing value. 

Best regards

Steve Gerbsman and Bob Tillman

Steven R. Gerbsman

Cell: 415.505.4991


Gerbsman Partners (http://gerbsmanpartners.com) has been retained by Oxford Finance LLC (“Oxford”), the former senior secured lender for Ohana Biosciences, Inc. (“Ohana”), to solicit interest for the acquisition of Ohana’s assets, which primarily consists of two (2) US issued patents and 13 patents pending (collectively, “Ohana IP”).  

Please see the following: 

  • Exhibit A – Sales information letter
  • Exhibit B – NDA
  • Exhibit C – Asset List – included expired and abandoned patent’s

Ohana was founded in 2016 by Flagship Pioneering to develop a sperm biology platform combining single-cell sequencing, cell surface profiling, and computational biology to analyze large libraries of genetic and molecular information from individual sperm cells. Ohana scientists applied these insights to develop product opportunities across reproductive health, including its Spertility program for sperm optimization, for which it was seeking 510(k) clearance from the FDA as a medical device. Ohana was not able to raise sufficient capital in early 2021 to continue operations and its assets were assigned to an assignee in an Assignment for the Benefit of Creditors (“ABC”) in mid-2021.

In late 2021, a buyer acquired Ohana’s assets from the assignee financed by a seller note that has since been assigned to Oxford in partial satisfaction of Oxford’s original loan to Ohana.  Given the challenging fundraising environment for biotech companies, the buyer has elected not to develop these assets further, and Oxford is able to offer the Ohana IP for sale. The buyer continues to hold the Ohana IP as an accommodation for Oxford and intends to transfer title directly to a new buyer.


The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to Ohana was supplied by Ohana in 2021. It has not been independently investigated or verified by Oxford, Gerbsman Partners or its agents. As the assets available for sale consist primarily of issued and pending patent applications, all information in this letter on Ohana, the Spertility program, and the market opportunity is provided for background and should not be relied upon. 

Potential purchasers should not rely on any information contained in this memorandum or provided by Ohana, Oxford or Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

Oxford and Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of Ohana or Gerbsman Partners’ negligence or otherwise. 

Any sale of the Ohana IP will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of Oxford or Gerbsman Partners.  Without limiting the generality of the foregoing, Oxford and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the Ohana IP and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

This memorandum contains confidential information and is not to be supplied to any person without Gerbsman Partners’ prior consent.  This memorandum and the information contained herein are subject to the non-disclosure agreement attached hereto as Exhibit B.

 The Bidding Process for Interested Buyers

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit B) to have access to diligence materials (the “Due Diligence Access”).  Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the Ohana Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Ohana Biosciences, Inc., Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and neither Ohana Biosciences nor Gerbsman Partners (or their respective, staff, agents, or attorneys) makes any representations as to the accuracy or completeness of the same.  

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the Ohana IP.  Sealed bids must be submitted so that the bid is actually received by Gerbsman Partners no later than Thursday, March 17, 2023at 3:00 p.m. Pacific Time (the “Bid Deadline”) to steve@gerbsmanpartners.com

Bids should identify those assets being tendered for in a specific and identifiable way.  Bidders interested in specific components of Ohana IP must submit a separate bid for such assets.  Be specific as to the assets desired. 

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable.  The winning bidder will be notified within 3 business days after the Bid Deadline.  Non-successful bidders will have their deposit returned to them.

Oxford reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all assets from sale.  Interested parties should understand that it is expected that the highest bid will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

Oxford will require the successful bidder to close within 7 business days.  Any or all of the assets of Ohana will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the Ohana Assets shall be the sole responsibility of the successful bidder and shall be paid to Oxford at the closing of each transaction.

For additional information, please see below and/or contact:

Steven R. Gerbsman                                                          

Gerbsman Partners



Kenneth Hardesty

Gerbsman Partners


 Uncertain times. A world aflame in conflict and global economies strained and hovering on the recession line. You managed valiantly to weather the storm with all your might and diligence, but then unforeseeable events suddenly turn everything upside down.

            When bad economic weather laps at your door, it is time to reach out to the experts who have captained many a ship out of storms and peril. Such a firm is Gerbsman Partners. For nearly 40 years, we have assisted a hundreds of clients in a broad range of industries with thorough analysis, innovative go forward plans, maximizing cash resources for future growth, and address balance sheet and contingent liability issues. 

            As a creative innovator, Gerbsman Partners has created strategies and processes that addressed the resolution of specific issues, such asterminating Prohibitive Executory Real Estate Leases, Computer and Hardware Related Leases and Senior Sub-Debt Obligations, Accounts/Trade Payable Obligations, and Software and Technology-Related Licenses.

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property, as well as maximizing value for Intellectual Property Patents. Since 2001, Gerbsman Partners has been involved in maximizing value for 118 technology, medical device, life science, solar, fuel cell, cyber security, consumer and digital marketing companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M & A Transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, New York, McLean, VA/Washington DC, Orange County, Boston, Europe and Israel.

            To assist in the process to navigate out of your personal storm, press the weblink below to access our website which is full of valuable advice, insights and processes and the nationally and internationally branded expertise of Gerbsman Partners, or reach out for a free private consultation with our principal, Steven Gerbsman at steve@gerbsmanpartners.com

The One percent group born between 1930 & 1946

The 1% Age Group 

This special group was born between 1930 & 1946 = 16 years.

In 2022, the age range is between 76 & 92.

Are you, or do you know, someone “still here?”

Interesting Facts For You . . . .

You are the smallest group of children born since the early 1900s.

You are the last generation, climbing out of the depression, who can remember the winds of war and the impact of a world at war that rattled the structure of our daily lives for years.

You are the last to remember ration books for everything from gas to sugar to shoes to stoves.

You saved tin foil and poured fried meat fat into tin cans.

You saw cars up on blocks because tires weren’t available

You can remember milk being delivered to your house early in the morning and placed in the “milk box” on the porch. The Good Humor ice cream truck coming through the neighborhood.

You are the last to see the gold stars in the front windows of grieving neighbors whose sons died in the War.

You saw the ‘boys’ home from the war, build their little houses that they were so happy with.

You are the last generation who spent childhood without television; instead, you “imagined” what you heard on the radio and you read library books.

With no TV until the 1950s, you spent your childhood “playing outside” There was no Little League. Many kids walked to school.

There was no city playground for kids. You organized neighborhood baseball and football games on vacant lots. You rode your bike everywhere 

The lack of television in your early years meant that you had little real understanding of what the world was like.

On Saturday mornings and afternoons, the movies gave you newsreels sandwiched in between westerns and cartoons.

Telephones were one to a house, often shared (party lines), and hung on the wall in the kitchen (no cares about privacy).

Computers were called calculators; they were hand-cranked.

Typewriters were driven by pounding fingers, throwing the carriage, and changing the ribbon.

‘INTERNET’ and ‘GOOGLE’ were words that did not exist.

Newspapers and magazines were written for adults and the news was broadcast on your radio in the evening. Kids read comic books.

The Government gave returning Veterans the means to get an education and spurred colleges to grow.

Loans fanned a housing boom

Pent-up demand, coupled with new installment payment plans opened many factories for work.

New highways would bring jobs and mobility

The veterans joined civic clubs and became active in politics.

The radio network expanded from 3 stations to thousands.

Your parents were suddenly free from the confines of the depression and the war, and they threw themselves into exploring opportunities they had never imagined.

You weren’t neglected, but you weren’t today’s all-consuming family focus.

They were glad you played by yourselves until the street lights came on.

They were busy discovering the postwar world.

You entered a world of overflowing plenty and opportunity; a world where you were welcomed, enjoyed ourselves and felt secure in your future although the depression poverty was deeply remembered.

Polio was still a crippler.

You came of age in the ’50s and ’60s.

You are the last generation to experience an interlude when there were no threats to our homeland.

The second world war was over and the cold war, terrorism, global warming, and perpetual economic insecurity had yet to haunt life with unease.

Only your generation can remember both a time of great war and a time when our world was secure and full of bright promise and plenty.

You grew up at the best possible time, a time when the world was getting better…

You are “The Last Ones.”

More than 99 % of you are either retired or deceased, and you feel privileged to have “lived in the best of times!”

Amen! It’s great being part of the 1% ….Special Group!