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Undertaking mergers and acquisitions demands confidence, especially in the arena of high risk-high reward emerging markets. Yet according to a poll of 1,300 professionals across industries ranging from financial services to technology and manufacturing, nearly 90 percent fail to conduct due diligence for compliance risks such as corruption, money laundering and fraud. Is it any wonder that only 10.4 percent express confidence in their management of M&A risks?
The survey, conducted by Deloitte Financial Advisory Services LLP, highlights a major stumbling block in M&A strategies—not looking deep enough into potential M&A targets. In a press release about the poll results, Bill Pollard, a partner in the forensic investigations practice of Deloitte said, “When deal timelines are compressed, the M&A market is strong and confidentiality agreements loom, it may be tempting to take shortcuts in certain diligence areas such as fraud, FCPA and other integrity risks.” Short cuts, however, may be the quickest route to trouble. You don’t have to look far for proof. Lately, enforcement actions by the U.S. Department of Justice (DOJ) have been hitting the headlines with alarming frequency.
You can’t always put the brakes on accelerated timelines for M&A activity—as the saying goes, you have to strike while the iron is hot. But failing to adequately vet the merger or acquisition target company—and its third-party relationships certainly isn’t a fast track to success. Instead, companies need to leverage tools that support an efficient, but thorough, due-diligence process. Here’s why:
M&A opportunities abound in today’s emerging markets and elsewhere, but with those opportunities come greater risk. Rather than relying on a superficial due-diligence strategy, you need to develop a due-diligence and monitoring program that looks beyond financial information so you can accomplish your next acquisition with confidence.
M&A opportunities abound in today’s emerging markets and elsewhere, but with those opportunities come greater risk. The <a href="www.idealsvdr.com/.../a> deal room can be used for M&A due diligence and other one-off transactions requiring a short-term contract.