In the context of mergers and acquisitions, why should a corporation conduct pre-acquisition due diligence? In this episode, I discuss with Vin DiCianni, founder of Affiliated Monitors, the commercial motivations behind participating in what may be construed as a compliance exercise. Vin and I will discuss the following:
The worth of a transaction, as well as its attractiveness, may be considerably influenced by factors such as financial risk, legal risk, or reputational risk. When a compliance practitioner is confronted with management at the acquiring company that needs to understand the need for thorough due diligence in an M&A transaction, factors such as current or historical bribery or corruption discovered at any point in the acquiring company provide the compliance practitioner with strong ammunition. You may emphasize the business reasons for compliance by avoiding the practice of concentrating on the regulatory components of M&A deals and instead putting more of your attention on the market reasons for participating in the required due diligence.
Important things to remember are:
When it comes to mergers and acquisitions, doing anti-corruption due diligence makes sense for a variety of legal and financial reasons.
In emerging markets, ESG might provide enormous opportunities for fraudulent activity.
Your analysis should be presented in high-risk, medium-risk, and low-risk forms.