November 11, 2020

Due Diligence: Best Practices for FCPA & Anti-Bribery Issues

This Cahill memo addresses best practices for addressing FCPA and related anti-bribery issues during the due diligence phase of a potential acquisition and during the post-closing integration process. Here’s the intro:

When considering acquisitions or significant investments, acquirers should conduct a thorough review of the target’s corruption risk and its compliance (or non-compliance) with the Foreign Corrupt Practices Act of 1977 (FCPA) and other applicable anti-bribery and corruption (ABC) laws. ABC due diligence is important not only to identify evidence of actual corrupt activity, but also to aid the assessment of overall risk when evaluating a transaction.

Pre-acquisition ABC due diligence can help inform post acquisition compliance integration at the target company and reduce post-closing exposure of the acquirer. A thorough review in advance of the transaction is particularly warranted for acquisitions in high-risk emerging markets. In the current M&A environment, acquirers should consider increased ABC risks that may arise from the COVID-19 pandemic. Modifications to the target’s anti-corruption program due to operational hardships and efforts to accelerate government approvals at a time when many governmental functions are significantly delayed should be particularly evaluated.

The memo provides an in-depth review of the various actions that should be taken as part of the due diligence process, and also provides guidance on developing and implementing an appropriate post-closing compliance program.

John Jenkins