What happens when you acquire or merge with a company with FCPA violations? What are the risks that come from doing so? Eric Feldman, Senior Vice President of Affiliated Monitors, Inc.™, joins Tom to talk about innovation in mergers and acquisitions around compliance and ethics. They discuss the role that the pre-acquisition and post-acquisition phases play in integrating the target company’s systems and culture into your own company.
- Eric Feldman retired from the Central Intelligence Agency with over 32 years of experience in Inspector General oversight and federal auditing, in both the Executive and Legislative branches of government. He joined Affiliated Monitors in 2011, an independent integrity monitoring service that helps companies reduce their risk of ethical failures by conducting comprehensive assessments of company ethics and integrity programs and measuring their impact on compliance, culture, and activities.
- What does Eric view as good pre-acquisition due diligence practices from the fix and compliance assessment? Eric starts by sharing how he became involved in the proactive assessment space. He talks about the nature of pre-acquisition due diligence, how it gauges the company’s compliance posture and its effect on organizational culture.
- After the assessment, the identified potential weaknesses are ranked by risk value. The existence of compliance infractions doesn’t necessarily mean that they shouldn’t proceed with the acquisition or merger. But certain precautionary steps must be immediately implemented during the post-acquisition process to integrate the companies’ operations.
- Beyond enforcing compliance policies, Eric talks about the importance of understanding why the employees will comply, as well as how culture supports an organization’s proactivity when it comes to compliance. A supportive culture will empower employees to comply, and an unsupportive corporate culture will discourage employees from reporting compliance issues.
- For the companies to successfully integrate, the pre-acquisition assessment of the target company should have complied the baseline ethics and compliance of your own company. Any gaps between what the target company is doing and what your company has put into place are filled during the post-acquisition process. Eric and Tom dive deep into how the pre-acquisition phase sets the stage for the post-acquisition phase.
- Eric shares the benefits of having an independent monitoring service conduct assessments for these mergers and acquisitions, and how this investment protects your company from the tension that surrounds the pre-acquisition and post-acquisition processes.
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