By Adam Turteltaub
When it comes to compliance due diligence during a merger or acquisition, the number one thing to know, says Kasey Ingram of ISK Americas, is that regulators expect it as a part of an effective compliance program.
Even if the regulators didn’t have these expectations, it’s just plain prudent, he argues. And, it helps the compliance department demonstrate the value it provides.
So how can and should compliance be involved? According to Kasey, it begins with having a seat at the table. Introduce yourself to the M&A team even before a deal is in the works. Deals happen fast; if you’re not there at the start you may be left out.
Once the deal begins, create a questionnaire for the business team to use to identify issues. Do a quick risk assessment even before you begin the questionnaire, looking at the industry and the company’s history.
The answers to your questionnaire can help identify potential issues which should be discussed with the M&A team. They can then decide if the risks are worth taking or even price them into the deal.
Also, recognize that when the deal closes the real work begins. Compliance needs to do additional due diligence, and the company may need to self-report if violations are found – there are strong incentives to do so.
In many ways, after the deal closes is the trickiest time for compliance. It’s essential to have a checklist of things you will need to do, and be prepared for culture clashes: no two businesses have the exact same culture.
Handle it all correctly and you could help both stem legal problems, and reduce internal friction.
Listen in to learn more. And for still more insights, consult the Complete Compliance and Ethics Manual.