The Importance of Regulatory Due Diligence in M&A Transactions

As the business landscape around the world continues to evolve and become increasingly complicated, compliance with regulations is more important than ever. It is imperative to do your due diligence thoroughly when pursuing funding, investment or partnerships. This will ensure that your business is in compliance with the law now and in the future.

Regulatory due diligence is the process of evaluating, observing and making sure that you are in compliance with laws and regulations. It covers a variety of issues, such as legal compliance, environmental practices as well as corporate governance, data privacy, and more. It can be used to determine a target’s ability to adapt and develop technologically.

It’s crucial for any M&A deal to have this. According to research conducted by MetricStream the rate of failure for deals in the world is between 70% and 90% with issues with regulatory regulations, geopolitical uncertainty and ill-advised acquisitions being among the top three reasons. Conducting a thorough due diligence process for regulatory compliance will reduce the chance of these issues, and ultimately increase the chance of a successful conclusion.

To reduce risk To reduce risks, regulatory due diligence must be conducted concurrently with commercial and financial due diligence. Inability to spot compliance issues could lead to significant fines and a loss of profits, not to mention a damaged reputation. It can even result in an arrest in extreme cases. It is important to be proactive and use a solution which permits you to conduct due diligence and regulatory screenings across multiple jurisdictions. Nexis Diligence+ ™ integrates an integrated business intelligence platform and anti-money laundering services (AML) and anti bribery and corrupt (ABC), and forensic services into a single source.

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