A US client was in the process of acquiring a European based manufacturer which operated a large, multi-jurisdictional distributor network across a number of high risk regions. The client required an in-depth anti-corruption due diligence and risk assessment of the prospective company.
As a result of previous FCPA violations, the client faced enhanced scrutiny of its M&A activity by their local regulator and needed to demonstrate it was taking its compliance obligations seriously. The critical nature of the task combined with a short time frame to the completion of the acquisition meant that the client required an experienced and responsive team.
Experts from Stroz Friedberg’s Forensic Accounting and Due Diligence practices conducted a high level assessment of the current compliance landscape and control environment of the company and identified potential risk areas for corrupt activity.
A team was quickly mobilised to work onsite at the company, interviewing key executives and interrogating their accounting system. The investigation combined a deep dive examination of the company’s books and records alongside public record research into the entity, its key executives and a number of its distributors.
Additionally, a tailored transactional testing program was developed by our Forensic Accounting practice, focusing on high risk financial transactions with distributors and suppliers as well as analysing payments in high risk expense accounts. Sophisticated data analytics were applied to the company’s financial records to identify red flag transactions.
Stroz Friedberg’s findings enabled our client to make an informed and confident choice regarding the risks and value of the proposed acquisition. For example, investigations revealed that the target company had limited anti-corruption policies and procedures, poor internal controls, and questionable third-party payments which could lead to possible accusations of corruption.
The client used our assessments to understand the substantial amount of work and financial commitment needed to implement a compliance and ethics program in alignment with its high standards. By engaging Stroz Friedberg, our client found itself in a stronger position to reassure regulators that its M&A processes were both robust and comprehensive.