The Compliance Integration Risk Assessment

For the want of a nail, the horse was lost. For the want of a horse, the message was lost. For the want of a message, a battle was lost. For the want of a battle, a kingdom was lost. All for the want of a nail.

Many compliance practitioners are aware of the Johnson & Johnson (J&J) Deferred Prosecution Agreement (DPA), which contained “Enhanced Compliance Obligations” including those around mergers and acquisitions (M&A). While many have focused on the ‘safe harbors” of compliance training within 12 months and a full Foreign Corrupt Practices Act (FCPA) audit within 18 months, there are other requirements that the compliance practitioner needs to consider, in the compliance context, in the post-acquisition phase. Today we consider the post-acquisition risk assessment and note that the above quoted ancient adage holds true today, particularly in the area of risk assessment related to the integration of compliance in an acquisition. This issue was recently explored in the Houston Business Journal by Connie Barnba, in her Mergers & Acquisition column, in an article entitled “Risky details are the devil when marry business operations”.

In her article Barnba advises, “When it comes to integration plans, the devil is always in the risk-related details with one or more overlooked items starting an accelerating chain of events that results in significant destruction of value.” She goes on to state that the “nail that is frequently mission is an assessment of the integration risks involved” in attempting to execute the business strategy of post-acquisition integration. Nothing could be truer that in the anti-corruption compliance component of M&A transactions.

Barnba recommends a pre-acquisition assessment of risk. Further, such an early assessment will inform the transaction research and evaluation phases ...

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