Fernanda Beraldi and Ed Broecker on Compliance’s Role in M&A’s [Podcast]


Post By: Adam Turteltaub

Mergers and acquisitions can be filled with landmines.  To find out what compliance teams can do to help manage the risk, and help ensure a successful transaction for the business unit, we spoke on this podcast with Fernanda Beraldi, Senior Director, Ethics and Compliance at Cummins Inc. and Ed Broecker, Partner, Foster Brown Todd.  The two of them will be leading the session Compliance Diligence in M&A:  Best Practices from LOI to Integration at the 2021 SCCE Compliance & Ethics Institute, which will be taking place in-person and virtually September 19-22, 2021.

Since the earlier compliance is brought into the M&A process the better, they advise developing a close relationship with the business. The goal is to have compliance involved starting with the initial discussions, even before there is a letter of intent.

When doing a compliance assessment, they recommend conducting a risk-based approach, to a point. Looking at legal and regulatory risk areas are important, but as important is looking at the corporate culture. Get a handle on whether the compliance program simply exists on paper or is woven into the way the company does business. Take the time to interview the compliance team at the target company and ask specific questions about culture, training, and receptiveness to compliance.

Be alert also to one red flag that is often missed: the absence of helpline calls and cases.  While it is hard not to miss the red flag of a lot of calls from a facility or a large number of investigations, it can be easy not to notice when there are far too few calls, or none at all. That may be the very troubling sign of a culture that makes it difficult, if not impossible, for employees to raise their hands when they see something wrong.

After the acquisition, they advocate for the creation of a compliance champions or ambassadors program. Having people in other departments who can be the eyes, ears, arms and legs for the compliance program can be invaluable both for what is happening and for communicating compliance messages.

Listen in to learn more, and to gain even more of their expertise, be sure to join us in Las Vegas at the 2021 SCCE Compliance & Ethics Institute.