Mergers and Acquisitions
In the process of a merger or acquisition, timelines are often strict, budgets tight and openness and availability of target information is restricted. However, the acquiring organization wants to accurately assess the targets’ value. It is in these circumstances that your organization wants, and for avoidance of certain successor liability, needs to conduct a thorough due diligence of target’s organization, business models, contracts and books and records etc.
Successor liability is an integral component of corporate law and applies to all kinds of civil and criminal liabilities. Successor liability does not, however, create liability where none existed before.
From an ABC compliance perspective, authorities encourage organizations to conduct pre-acquisition due diligence and improve compliance programs and internal controls after acquisition. Your organization can be held liable for bribes paid by its acquired entity because you knew or could have known that bribes are involved.
When your organization starts an M&A due diligence, take the following into consideration:
- based on the extent of information, accessibility to target management and time for investigation you can determine which party has relative power;
- based on what is being acquired and how the deal is structured you can determine the risk profile;
- based upon the results of the above you determine the must-haves and nice-to-haves;
- identify exposure to ABC compliance risks by making use of a phased approach:
phase 1: obtain understanding of the operations (external risk assessment and public source enquiry)
phase 2: analyze compliance and ethics policies and procedures, conduct interviews of key executives, understand the role of joint ventures and Third Party affiliates, transaction records analyses (spot checks)
phase 3: analyze results, identify potential red flags and determine if there are possible violations of anti-bribery and anti-corruption laws
GRCMD provides you:
Software solution for the effective conduct due diligence in mergers and acquisitions in any field, from the finance department and ending with the Department of Contracts, Compliance and HR departments. Software package from GRCMD not only completely automates the process of due diligence procedures for mergers and acquisitions, but also reveal abnormalities in the manner of behavior, risk indicators and the possible consequences of not performing the compliance requirements of the absorbed company.
GRCMD uses its advanced software solution that allows you to carry out fully automated due diligence in mergers and acquisitions in a short time and without any additional cost. First of all, a software solution GRCMD analyze risks in your organization (liabilities), by assessing the internal and external risks, supported by audits and spot checks, as well as by means of detecting deviations in the system, such as vocabulary, outstanding risk appetite; deviation from the usual behavioral patterns; and risk indicators that warn you about possible or already impending violations and weaknesses of the organization.
GRCMD can combine data absorbed organizations (such as the regulatory framework, compliance policies, contracts, reports on the work of employees and other data recording and reporting) with various publicly available information, such as lists of politically exposed persons (PEP), the state registers, the media and provide comprehensive reports on all departures. Also, GRCMD will provide feedback on all the weaknesses in the system of internal control and be able to start a workflow for review and improvement of the system after the takeover.
GRCMD offers a means to:
An external evaluation of the risks within the due diligence for mergers and acquisitions, including strannovoy, market, transactional risks, the risk associated with the product and the risks of distribution channels;
conduct an internal assessment of the risks within the due diligence for mergers and acquisitions, assessing the compliance system of the acquired company (legal framework, appropriate measures, top management and board members, past and current events and occurrences, reputational risk, legal risk, and their value (investigating claims by, and problem solving)) and helping your organization to understand what needs to be tested in full, where you can spend only spot checks, and that would do well to simply check;
add predictive value by identifying (traces) of bribery and corruption in the early stages;
- to forecast and prioritize your corrective action;
- document and monitor the execution of corrective actions;
- control all the abnormalities associated with bribery and corruption;
- receive feedback on the weaknesses of the internal control systems;
- run workflow for revision and improvement of internal control systems;
- automatically generate a report on the current state of affairs at any level, whether it's business unit, the national office of the company or the entire holding as a whole, as well as on any subject;
- generate reports not only on the basis of historical data, but also on the basis of predicted values, allowing your company to take a step towards integrated reporting.