Welcome to the newest addition to the Compliance Podcast Network, Compliance and Coronavirus. As the Voice of Compliance, I wanted to start a podcast which will help to bring both clarity and sanity to the compliance practitioner and compliance profession during this worldwide health and healthcare crisis. In this episode, I am joined by Melissa Koch, co-founder and CEO of InFront Compliance. We visit about the issues she is seeing for FinTech in new normal of Covid-19 and going forward. We also consider the state of New York enforcement action involving First American Title and its implications going forward.
InFront is a next-gen online assessment and reporting platform focused on reducing risk and simplifying compliance for highly regulated entities, such as our nation’s supply chain and financial institutions. Founded by seasoned technology lawyers with a deep understanding of the fast-evolving regulatory landscape, InFront offers a secure digital solution built on extensive expertise and an intuitive interface that is accessible across all stakeholders. You can check out their website, here.
Day: October 15, 2020
The compliance component of your M&A regime should begin with a preliminary pre-acquisition assessment of risk. Such an early assessment will inform the transaction research and evaluation phases. This could include an objective view of the risks faced and the level of risk exposure, such as best/worst case scenarios. A pre-acquisition risk assessment could also be used as a “lens through which to view the feasibility of the business strategy” and help to value the potential target.
I suggest a four-step process to plan and execute a strategy to perform pre-acquisition due diligence in the M&A context.
- Establish a point of contact.
- Collect relevant documents.
- Review the compliance and ethics mission and goals.
- Review the elements of an effective compliance program.
There are multiple red flags which could be raised in this process, which might well warrant further investigation. They include if the target has ineffective compliance program elements in their compliance program or if there were frequent breach of policies and procedures. Obviously, a target which is in financial difficulty would bear closer scrutiny. Structurally, if the company did not have a formal ethics and compliance committee at the senior management or Board of Directors’ level, this could present issues. From the CCO perspective, if the position did not have Board or CEO access or if there were not regular reports to the Board, it could present an issue for compliance. Conversely, if there were frequent requests to waive policies, management over-ride of compliance controls or no consistent consequence management for violations; it could present clear red flags for further investigation.
Three key takeaways:
- The results of your pre-acquisition due diligence will inform your post-acquisition integration and remediation going forward.
- Periodically review your M&A due diligence protocol.
- If red flags appear in pre-acquisition due diligence, they should be cleared.
Peter Grossman is the co-founder and Chief Strategist of Labyrinth Training, a leading compliance, innovation, and training company that is redefining how compliance and code of conduct training is delivered to employees. They are dedicated to training employees through captivating storytelling. Labyrinth uses award-winning interactive design to bring their clients’ policies to life, which engages the audience and imparts knowledge when they are paying full attention. He joins Vince Walden to discuss the impact storytelling has as a teaching method, and the importance of abandoning the right-wrong answer narrative.
Labyrinth makes each training video specific to each client’s needs and circumstances. Custom-made content has a higher chance of reaching the audience and capturing their attention, as well as ensuring that the delivered training is being retained. A Stanford study showed that creating mini-narratives to memorize something works much better than rote learning.
Labyrinth has made videos about data privacy, compliance, anti-harassment, and even human rights training like debt bondage. There is no magic path your employees can walk through where they won’t encounter threats of corruption, says Peter. If you’re trying to teach a lesson where there’s a good path and a bad path, you’re teaching the wrong lesson.
Resources
Peter Grossman on LinkedIn
LabyrinthTraining.com
