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 becoming more crucial than ever. No matter if you’re looking to invest, funding or partnerships it is imperative to do your due diligence thoroughly to ensure that your business is compliant now and into the future.

Regulatory due diligence is the process of the process of analyzing and monitoring an customer, partner or investor’s background to ensure that they are in compliance with the laws and regulations. It covers a broad range of subjects, including legal compliance, environmental practices and corporate governance, data privacy and more. It can be used to evaluate the capacity of a company to adapt and grow technologically.

It’s crucial for any M&A transaction. According to MetricStream’s research the failure rate for deals in the world is between 70% and 90 percent. Geopolitical uncertainties and regulatory hurdles as well as poorly advised acquisitions are among the most common reasons. Performing robust regulatory due diligence can reduce the risk of these issues, thereby increasing the chances of a successful conclusion.

Regulatory due diligence should be conducted in conjunction with financial and commercial M&A due diligence to reduce risks. Inability to spot compliance issues could result in substantial fines and losses in profits, not to mention a damaged reputation. In extreme cases, it can even result in a criminal conviction. The key is to be proactive with the process, using the right solution to conduct regulatory due diligence and other screenings across various jurisdictions seamlessly. Nexis Diligence+ ™ integrates an integrated business intelligence platform, anti-money laundering services (AML) as well as anti bribery and corrupt (ABC) and the forensic services into one source.

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