Acquisition Risks in Emerging Economies

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1 Response

  1. Anonymous says:

    I read your article with great interest. I found it to provide an excellent broad roadmap addressing the concerns and potential pitfalls for investors surrounding the anticipated uptick in global acquisitions in emerging economies; particularly with respect to FCPA concerns.

    In your discussion, you indicate that “acquiring companies should conduct an FCPA compliance assessment as a first step in considering deals” and that “the first step in FCPA due diligence should be a risk assessment” to help flesh out “areas of potential exposure” and “potential red flags”. From there, you go on to suggest that areas of focus should include “risks in the industry, geographic considerations”, etc.

    I’d be interested to hear your thoughts (perhaps it even warrants its own article) on the importance of independent background investigative due diligence as a necessary part of this “first step in considering deals”. By this I mean in depth investigation into the acquisition target and its high level executives and other key employees. Particularly with respect to certain emerging markets where in depth information may be harder to come by, or more easily obfuscated.

    Confirming the identity of the acquisition target and its principals, as well as ascertaining information relating to corporate and personal civil and criminal litigations, derogatory financial filings and proceedings, regulatory sanctions and/or investigations, other business affiliations, asset verification, licenses and other professional designations, political exposure, and peer reputation and adverse media attention, are all areas where red flags may exist.

    Would you agree that this type of investigative intelligence is a critical piece of a robust FCPA due diligence approach? Issues which may arise here could certainly “undermine an entire deal and need to be identified and assessed as quickly as possible in order to determine whether it is worth going forward with a deal”.

    I would be interested to hear your thoughts on this.