Self-Disclosure for Issues Identified in M&A Process

This is the next in the series of publications launched by GK Advisory, addressed to corporate counsels and compliance officers focused on practical solutions to real world issues of anti-bribery, anti-money laundering, and sanctions compliance.

Topics covered will be drawn from GK Advisory’s experience in advising its client base as well as the practice of the Concilium Network member firms. GK Advisory is an Israeli member of the Concilium Network.

Self-Disclosure for Issues Identified in M&A Process

Question:?What actions should a company undertake upon discovery of a misconduct by an entity it acquired?

Answer: The acquiring entity should always prioritize the compliance function during the M&A process.? It should have a prominent role in evaluating and de-risking M&A decisions.? However, no matter how diligent an acquiring entity may be, some of the issues can only be uncovered during post-acquisition due diligence and integration.?

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In the context of issues involving bribery and corruption identified by an acquiring entity, the US Department of Justice (“DOJ”) has continuously emphasized the importance of self-disclosure.? To address the discovered misconduct by the acquired entity, the acquiring company is advised to voluntary self-disclose the misconduct, fully cooperate with the authorities investigating the misconduct and actively engage in remediation of the discovered misconduct.? In those cases, the company may secure a declination from prosecution.? The position of the DOJ is that acquiring companies should not be penalized when they engage in careful pre-acquisition diligence or timely post-acquisition integration to detect and remediate any “legacy” violations. It is critical though that the conduct in question does not continue post-acquisition.?

Your comments and suggestions about any aspect of our publications are welcome, so do not hesitate to reach out to us and submit issues for discussion that are relevant to your day-to-day operations. If you have colleagues or acquaintances who may be interested in practical aspects of ABC/AML/sanctions compliance best practices, please do share our updates with them.

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*The contents of this message, current at the date of publication, are for reference and general informational purposes only and do not constitute legal advice.?You should contact your attorney to obtain advice with respect to any particular legal matter.?You should not act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction.?Only your individual attorney can provide assurances