Regulatory Due Diligence

The M&A regulatory landscape

The regulatory environment globally is under increasing pressure following the financial crisis, global rate fixing scandals and high-profile examples of poor governance and culture. It is therefore critically important to identify regulatory risk that is prevalent in any M&A transaction.

Increasingly we are also seeing demand from investors for greater due diligence scrutiny to mitigate inherent reputation risk.

Buy side

The approach to regulatory due diligence has changed notably over the past years with venture capital or private equity firms requiring professional advisors to undertake a wider and deeper examination of the target acquisition’s regulatory compliance.

Sell side

It has also been notable that savvy sell side firms, and their advisors, are investing more time in pre-transaction preparation to protect the business’ inherent value.

Our Approach to Assisting Firms with Regulatory Due Diligence

Our Approach on the Buy Side

On the buy side of a transaction or diligence relating to fundraising, we will support our clients throughout the entire transaction lifecycle from pre-due diligence to head of terms to close. Our approach is driven by the client requirements but typically will entail a comprehensive testing, analysis of documentation, interviews with the target senior team, production of the final report and subsequent presentations to the client and insurers where applicable.

The focus of our report on the buy side is to identify the key regulatory risks, their impact for the acquirer or investor and the cost to remediate. We will identify areas for indemnification, pre close action or post close action.

Our Approach on the Sell Side

On the sell side of a transaction, we work alongside the firm to identify any regulatory risks that could materially impact the acquisition value. Through onsite testing, document review and systems analysis, we produce a detailed report and then work with the firm to remediate these issues prior to the transactional diligence being undertaken. We bring our understanding of the value drivers on the buy side to ensure that we can maximise the deal value for our client.

How can we help?

We are a highly skilled team of deep domain experts who provide regulatory due diligence support to many companies in the financial services sector. We have a strong reputation for assisting clients, both on the buy and sell side, in identifying the regulatory gaps and inherent risks in the payments, e-money and FX brokers sector.