DealLawyers.com Blog

June 23, 2017

Anti-Corruption: Due Diligence & Risk Management

This Skadden memo provides an overview of key considerations in structuring and performing anti-corruption due diligence in an M&A transaction.  Here’s an excerpt from the intro:

A successful merger or acquisition requires careful consideration of many components and diligence in a number of specialties. Corruption issues, generally, and the global reach of the Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, specifically, can present unique challenges to the structure of a deal and a party’s approach to diligence.

The memo identifies some innovative strategies for managing anti-corruption risk – such as a “phased investment” approach:

One novel approach to managing anti-corruption risk is a phased or staged investment in a target company. An acquirer that is not comfortable with a target’s corruption risk may consider an initial, limited investment, which should be well below the threshold at which regulators will impute control. The acquirer can invest further if the target company meets compliance bench-marks.

The memo highlights areas of emphasis for anti-corruption deal diligence and risk management at the pre-signing stage, during the process of structuring the deal, and after the closing.

John Jenkins