MERGERS & ACQUISITIONS

Regulatory compliance due diligence and reporting

The assessment of compliance risks in connection with due diligence upon the acquisition of a company is increasingly becoming market standard in the United States. Proceeding without a compliance risk assessment is hardly conceivable in any corporate transaction – not only in larger corporate transactions but also in small and mid-size transactions. One of the reasons for this trend is that regulators expect the purchasing firm maintain its fiduciary obligations towards the protection of clients and their assets. Purchasing firm’s must undertake “best efforts” to understand all risks and address them prior to or at the time of the corporate action. Due to the complex nature of corporate transactions, as well as the economic significance of compliance risks for the target group and the purchaser, it is in almost all cases necessary to address compliance issues during due diligence risk assessments.

Solid™ has the experts to identify not only risk, but also make recommendations toward mitigating identified risk areas. Our experts will look at the following risk areas:

• 1.

  Regulatory Breaches, litigation and Customer Complaint Risks



• 2.

  Outside Affiliations and Business Lines Risk



• 3.

  Director and Officer Risks



• 4.

  Compliance Program Risks



• 5.

  AML and foreign client Risks



• 6.

  Social Media and Advertising Risks



• 7.

  Trading Process, Valuation and Investment Process Risks



• 8.

  Data Security Risks

Process of compliance due diligence

Inevitably, all firms have risk. Solid™ seeks to identify for the purchasing firm that compliance risks are adequately addressed in the target and are not so severe as to be a deal-breaker. In addition, Solid™ experts will comment as to whether any relevant issues are addressed or in the process of mitigation.

Pre-signing compliance due diligence

Solid™ experts will assist the purchasing firm during pre-signing phase. The compliance due diligence process is usually consists of an initial call with the target company, a short on-site visit and the issuance of a risk analysis report to the prospective purchasing company.

There is also an increasing trend in which the purchaser tries to use compliance expert sessions with the seller’s (or target company’s) compliance officers to help the purchaser develop an increased sensitivity for identifying possible compliance risks in the target group. Solid™ consultants will work with the purchasing firm and target firm towards enhancing current programs and provide guidance towards mitigating future risks. After the acquisition, Solid™ consultants can provide on-going consulting support-based criteria needs established with the purchasing company.

Solid™ will provide a Compliance Program Due Diligence Risk Assessment for the purchasing company’s consideration in its due diligence efforts.

*Solid™ is not a law firm and does not provide legal opinions.