Geopolitics and business are inextricably linked. In this episode of Riskology by Infortal, Dr. Ian Oxnevad and Chris Mason explore how geopolitical risk analysis should be an integral part of mergers and acquisitions due diligence to uncover hidden risks and opportunities. They also discuss the emerging business activity in Cuba and its geopolitical implications.
Infortal Worldwide is a global risk management and investigations firm specializing in helping businesses navigate complex risk landscapes. The company’s focus extends to various areas, including economics, politics, and geopolitical risk. By delving into these interconnected realms, Infortal Worldwide aims to provide clients with comprehensive insights that empower them to make informed decisions, especially in critical areas such as mergers and acquisitions, private equity investments, and other strategic moves.
You’ll hear Chris and Ian discuss:
- Cuba is an emerging market M&A opportunity. There is growing entrepreneurial activity and cross-industry demand for business with the U.S.
- However, the politics, military, and security dynamics around Cuba pose risks with China’s deepening involvement.
- Cuba has significant untapped potential to again become an economic and financial hub, given its strategic geographic location.
- When looking for investment opportunities, it’s important to assess geopolitical risks to understand potential political issues that could impact the business environment before and after a deal.
- To ensure a thorough examination of potential risks, checklists for operational due diligence should include an analysis of geopolitical factors. This helps identify dependencies and vulnerabilities in the supply chain, allowing for proactive risk mitigation.
- Gathering intelligence from local sources at different stages of a deal provides insights into the actual state of affairs, business practices, and risks related to the target firm, industry, and operating environment.
- Strengthen decision-making by obtaining verified information, establishing structured M&A due diligence processes, and documenting geopolitical risk analysis for your teams.
- Detect issues early and voluntarily report them to regulators to limit liabilities. The Saffron SA case in China exemplifies the benefits of FCPA due diligence in this regard.
- With fluctuations in global supply chains, M&A decisions should be informed by geopolitical considerations, influencing reshoring and nearshoring choices as localization trends gain momentum. This presents both opportunities and the need for thorough due diligence.
KEY QUOTES
“You need local boots on the ground, intelligence gathered and pulled in centrally so that you can really get a true handle on what the business climate and business cultural circumstances look like.” – Chris Mason
“…because M&A is one of the main ways that companies are going to be reshoring or nearshoring their supply chains.” – Dr. Ian Oxnevad
“When it comes to mergers and acquisitions, but also when it comes to seeking out your targets, does that process include geopolitical risk analysis? Are you really looking at how changes in international relations, changes in conditions, things that can impact supply chains, as an example, are you factoring that into the analysis to really make sure that you’re finding a good and solid opportunity? Because the last thing that you want is to pull together a deal …and then all of a sudden, a major international event just throws everything off course.” – Chris Mason
Resources
Dr. Ian Oxnevad on LinkedIn
Chris Mason on LinkedIn
