Due diligence during a merger or acquisition is difficult even in the best of circumstances. There is only so much you can see and so much time to see it before the deal closes. Add the complexities of a pandemic and business in emerging markets, and the challenge increases exponentially.
To determine how to conduct due diligence most effectively we turned to Krista Muszak, Global Services SOX Controls and Compliance Supervisor, Johnson & Johnson and Louis Perold, Principal, Citadel Compliance and a member of the Society of Corporate Compliance and Ethics & Health Care Compliance Association board. The two of them will be addressing the topic at the 2022 SCCE European Compliance & Ethics Institute.
To ensure that compliance due diligence is conducted effectively they recommended becoming activity engaged with the business and M&A team. This will help ensure you get sufficient information on the upcoming transaction and the business rationale behind it. Be sure also to understand the transaction itself and the various stakeholders. Together these can help provide guidance on how to conduct your due diligence.
From there it’s important to get a handle on the ownership of the target company and key staff. Meet with them, if possible, to learn about the compliance program.
When assessing the program, be sure to put data analytics to use. Helpline data is very worth reviewing: What is the volume? What issues are coming up? Are inquiries and allegations being responded to in a timely way?
Take a look, too, at the risk assessment and audits to see if there is any data that indicates trends of fraud, policy violations or other misconduct.
Try and make up for the lack of in-person meetings by increasing your number of touchpoints at the target company. Also, see if there are resources locally that you can turn to who can be your local arms and legs.
Finally, make sure you have a handle on the range of legal and regulatory issues that you will have to manage. Anti-corruption gets a lot of attention in emerging markets, but data protection and privacy, money-laundering, human trafficking, modern slavery and a host of other risk areas are present as well.
Listen in to learn more and then join us at the 2022 SCCE European Compliance & Ethics Institute.