The Importance of Regulatory Due Diligence in M&A Transactions

As the business landscape around the world continues to change and become increasingly complex, regulatory compliance is more crucial than ever. No matter if you’re looking to invest or funding, it’s imperative that you undertake thorough due diligence to ensure your business remains in compliance now and into the future.

Regulatory due diligence is the process of reviewing and monitoring an potential investor, partner or customer’s background to ensure compliance with the laws and regulations. It covers a wide range of subjects including legal compliance, corporate governance data security, corporate governance, and more. It can also be used to determine the potential of a particular target’s technological growth and adaptation.

It’s crucial for any M&A transaction to have this. According to research conducted by MetricStream, the failure rate for deals in the world is anywhere from 70% to 90 percent. The uncertainty of geopolitics, regulatory hurdles and poorly advised acquisitions are the most frequent reasons. A thorough approach to the regulatory arena can mitigate these risks, increasing the probability of a successful outcome.

Due diligence in a regulatory context should be conducted in alongside commercial and financial M&A due diligence to limit the risk. Failure to recognize compliance issues can lead to substantial fines and losses in profits, not to mention a damaged reputation. In extreme cases, it can even result in a criminal conviction. It is important to be proactive and choose a software that permits you to conduct regulatory screenings and due diligence across different jurisdictions. Nexis Diligence+ ™ integrates an integrated business intelligence platform and anti-money laundering services (AML), anti bribery and corrupt (ABC) and forensic services into a single source.

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