Windows of Opportunity: Due Diligence Prior to Regulatory Inquiries

Welcome to the November 2023 edition of our newsletter!  In this issue, we’ll examine how evolving scrutiny of transactions by federal regulators is affecting the need for due diligence.

Calm Before a Storm?  The Justice Department’s “Safe Harbor? Period and Due Diligence

As mentioned in last month’s newsletter, the U.S. Justice Department is implementing a program of heightened compliance for mergers and acquisitions.  As part of this effort, a one year “safe harbor” period may be implemented, which would encourage a flurry of deals before it expires.  Longer term, the policy may strain the appetite for more complex dealmaking, especially cross-0border transactions which can carry a wider array of risks.  Additionally, insurers and counsel could gain added importance, as deal terms also evolve to cover the new regulatory framework.

Potential acquirers will benefit from using the safe harbor period to conduct thorough due diligence in any likely acquisition target, including inquiries into foreign and domestic corruption allegations and any industry specific regulatory matters which could gain new relevance. thorough vetting a company and its management teams, both domestic and foreign, can provide considerable benefit once a regulatory review is underway.