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When Mergers and Acquisitions Get Messy

Mergers and acquisitions can be tricky – particularly if illegal activity is discovered. When it comes to FCPA enforcement, though, compliance officers involved in the M&A process can breathe easier. Let’s look at M&A-related compliance issues and the government’s current stance.

Worries about non-compliance shouldn’t prevent M&As, according to the Department of Justice. Deputy Assistant Attorney General Matthew S. Miner gave a speech earlier this year about the DOJ’s FCPA Corporate Enforcement Policy. The DOJ prefers to decline to prosecute if a company voluntarily discloses FCPA trouble and cooperates with regulators to resolve the issue — it also applies to the inherited FCPA liability a company picks up through mergers and acquisitions.

This stance is not particularly shocking. The DOJ has worked for several years to give companies more enticement to confess their FCPA sins and work with prosecutors to hold individual wrongdoers accountable. The FCPA Corporate Enforcement Policy cemented that position. It logically follows, then, that the DOJ would apply these changes to inherited liability. Miner’s message just spoke aloud a conclusion many compliance professionals already expected. Still, the FCPA Corporate Enforcement Policy touches on some deeper trends in business today that very much affect compliance programs and the compliance officers who run them.

Therefore, all the pre-acquisition due diligence efforts – background checks on key personnel, adverse media reports, assessment questionnaires, audits or transactional testing and more –– are always going to be vital to M&A deals. They demonstrate the company’s effort to find misconduct and lay the groundwork to remediate trouble. Without those parts of the program, the company can’t meet the three pillars of the FCPA Corporate Enforcement Policy and win a chance at an easier resolution of trouble. Compliance officers also need to consider the people issue. Once the deal closes, what will the combined ethics and compliance structure look like? How will executives at the target company be brought under the compliance program’s auspices, especially if they’re used to more autonomy? How will policies be expanded, or amended, or even canceled?

In the lower-middle market, mergers and acquisitions may not hold the same amount of lives and capital moving around, but they are crucial to the livelihood of those involved, and the details behind each move can be difficult to manage, let alone compliant with all laws involved. SA Capital Partners is a partner in this process with years of experience in mergers and acquisitions in the lower-middle market. Whether growing or moving on, SA Capital Partners allows you the peace of mind that your next step is in the right, legal direction.

About SA Capital Partners: SA Capital Partners is an innovative financial services firm that specializes in mergers & acquisitions advisory and capital raising for lower middle market businesses. We aspire to give all the tools necessary to complete any transaction. SA Capital Partner’s financial services industry specialists provide comprehensive, integrated solutions to banking transactions. Our breadth of services and industry knowledge allow us to understand each client’s unique business needs. Our goal is to make all financial services available to every small business. Website: Phone: (212)-235-2761 Email: #sacapitalpartners #sacapital #sacapitalpartnersllc

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