The Importance of Regulatory Due Diligence in M&A Transactions

As the business landscape around the world continues to change and become increasingly complicated, compliance with regulations is more important than ever. It is essential to be thorough when pursuing funding, investment or partnerships. This will ensure that your company remains compliant in the present and in the future.

Regulatory due diligence is a method of evaluating, observing and making sure that the company is in compliance with laws and regulations. It covers a variety of issues including legal compliance, corporate governance, data security, and more. It can also be used to identify a target’s capacity for technological growth and adaptation.

It’s essential to any M&A transaction to have this. According to research conducted by MetricStream, the rate of failure for deals globally is between 70% and 90 percent. Geopolitical uncertainties and regulatory hurdles as well as poorly advised acquisitions are the most frequent reasons. A thorough approach to the regulatory realm can help reduce these risks, thus increasing the probability of a successful outcome.

Due diligence for regulatory compliance must be conducted in alongside commercial and financial M&A due diligence to limit risks. Failure to uncover compliance issues could result in significant fines, losses of profits and a damaged reputation. It can even lead to the possibility of a criminal conviction in some cases. It is crucial to be proactive in the process, leveraging the right solution to perform regulatory due diligence and other screenings across multiple jurisdictions in a seamless fashion. Nexis Diligence+(tm) integrates a comprehensive business intelligence platform that includes anti-money laundering (AML) and anti-bribery corruption (ABC) and forensic services to provide one source of information.