The earlier the compliance team can get involved in the due diligence process of a company’s potential merger or acquisition, the better the chance any possible red flags or concerns can be identified and addressed before a deal is complete and costs in resources and reputation are more severe, according to risk and compliance experts speaking Wednesday during a webinar on third-party risks hosted by ethics advocacy organization Ethisphere. With global M&A activity continuing to grow, and with similar prospects for 2018, it’s important for companies to have the proper programs and systems in place to be able to make deep dives into potential partners, said Erica Salmon Byrne, executive vice president of Ethisphere.
Michael Ramos, managing director at Nardello & Co., which provides investigative and other services to companies, said in many cases business unit staff don’t call in compliance to conduct due diligence until a deal is almost ready to be finalized, sometimes leaving little time to do a proper, thorough evaluation. “What people on the compliance side need to do is to make sure the folks in legal and the folks in M&A understand the need for compliance to be brought into the process way ahead of the curve,” said Mr. Ramos. “You don’t want to try to do due diligence in Southeast Asia in two weeks. You can overcome that but it involves a lot of resources.” Veena Laakundi, chief compliance officer for manufacturer 3M Co., said early intervention by compliance can also help in the company’s evaluation of the target, and can uncover information that can be useful during negotiations, for example.
