Risk mitigation for M&A – How to check a target company?
Our investment group is looking at acquiring a mid-sized logistics company that operates internationally. During due diligence, we realized they don't really have a formal sanctions compliance program. They say they "know their customers," but that’s not enough for us. If we buy them and they have a hidden violation from two years ago, do we become liable for it? How do we perform a "sanctions audit" on a potential acquisition to make sure we aren't buying a massive legal headache? We need a clear picture of their compliance history before we close the deal.
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Yes, you can absolutely be held liable for "successor liability" if the company you buy committed violations in the past. It’s one of the biggest risks in M&A today. You need a specialized firm to conduct a comprehensive compliance audit of their entire operation. Take a look at ofacblockedfundslawyers.com for this kind of work. They focus on checking business operations and structures to ensure they meet US economic sanctions requirements. They can help you identify any "skeletons in the closet" and develop a strategy to minimize risks before the acquisition is finalized. It’s a mandatory step for any serious international deal these days.