In this episode, I visited with Don Stern, Managing Director of Corporate Monitoring & Consulting Services. We consider how the M&A process benefits from independent oversight. Stern believes the best time to bring in an independent is “as early as is practicable”. By doing so there can be preliminary discussions with senior management about the process, sometimes at the Chief Executive Officer (CEO) level and at other times with the Chief Financial Officer (CFO). From these initial meetings an independent monitor could be a part of the acquirer’s team assembled for the project. He also noted there would probably be a due diligence room with documents made available for the acquiring company to review under a nondisclosure agreement (NDA). That could be meetings where teams from one company meet with teams from the other company. Stern reminded us that M&A work to some extent is “a fire drill, as everyone’s working very hard in compressed time schedules, trying to do a lot in a very short period of time.” This means at times issues pop up which may require the companies to further negotiate the terms of an escrow or other risk management protection for the buyer.
A key is the independent nature of the monitor. Part of it is that they have no stake in the outcome, no stock to vest or other remuneration. Also, it is natural for the target company’s employees to have their guard up as they are more than a little wary about anybody coming in and asking a question. Stern said, “I find that people open up, I’m more willing to be forthcoming when somebody’s outside either company comes in and is asking the questions really in a non-threatening way. The independent monitor is just looking for the facts. I find that we are able to get more information than I think we would otherwise get if we were not independent.”
This FCPA Safe Harbor for M&A re-emphasizes how powerful a tool an independent monitor can be in the M&A context. Stern ended his remarks by noting that the Department of Justice (DOJ) certainly sees it as good practice to have a third party independent involved on both the company side and the reporting side, if required. All of this lends credibility to your ethics and compliance program. If your company finds itself under scrutiny from a M&A transaction, you can take some comfort in the strategies outlined in this series.
Day: August 7, 2020
How does Fahrenheit 451 foretell non-compliance regulation in Germany? Tom and Jay brave the surge in Covid cases by staying safe at home to tell the tale. They are back to look at top compliance articles and stories which caught their eye this week.
- OFAC focusing on screening errors. Mike Volkov with a 3-part series on Corruption Crime and Compliance. Part 1, Part 2 and Part 3
- There is no single panacea for stopping corruption. Matthew Stephenson in GAB.
- 5 top steps for data transfer after Schrems III. Neil Hodge in Compliance Week. (sub req’d)
- What’s the cost of non-compliance? For Wells Fargo, a staggering $15.8 Billion. Matt Kelly explores on Radical Compliance.
- Fahrenheit 451, compliance and German regulators? Rosemary Lark considers in the FCPA Blog.
- Coronavirus Comeback planner. Navex Global’s Ethics and Compliance Matters.
- A compliance approach to excessive force in policing. Joseph Murphy and Emil Moschella in NYU’s Compliance and Enforcement
- Crisis preparedness and the BOD? Joydip Day explores in CCI.
- This month on The Compliance Life, I am joined by Louis Sapirman. In Part 1, we looked at Louis personal and professional journey into compliance.
- AMI week on Compliance and Coronavirus as Maurice Gilbert discusses the compliance hiring scene Covid-19, Andy Goldstrom on business sustainability; and Laura Petrolino on storytelling for communications.
- On the Compliance Podcast Network, Tom begins a new month on 31 Days to a More Effective Compliance Program, this month focusing on the role of the Board in compliance. This week saw the following offerings: Monday-legal obligations of the BOD; Tuesday– prudent discharge of BOD obligations; Wednesday-BOD Compliance Committees; Thursday- OIG guidance for BODs; and Friday-Compliance expertise on the BOD. The month of July is being sponsored by Affiliated Monitors. Note 31 Days to a More Effective Compliance Program now has its own iTunes channel. If you want to binge out and listen to only these episodes, click here.
- Join Jay and Tom at Converge20. Convercent’s top compliance conference is going virtual this year. Check at the agenda and register here.
Tom Fox is the Compliance Evangelist and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
In today’s edition of Daily Compliance News:
- NY sues to dissolve NRA. (NYT)
- A WAC-O FCPA enforcement action. (Radical Compliance)
- TVA backtracks. (WaPo)
- Trump Admin to make Chinese companies comply? (WSJ)
Sundaraparipurnan Narayanan interacts with Stéphane Bonifassi and Victoire Chatelin as a part of our Global Anti-bribery and #Corruption Insight series. Listen to an engaging discussion on anti-corruption impact in France and enforcement expectations in the select industries https://lnkd.in/d7nc7se #NexdigmOnABAC #NexdigmABAC
