Regulatory Compliance In M&A: How To Ensure A Smooth Approval Process
Regulatory compliance in M&A is a critical aspect of the entire process. Getting approval for mergers is a complex, time-consuming process, which is why you’ll compile the necessary information before executing them. Not checking the boxes can result in unnecessary and expensive delays that can be easily avoided. Anticipating potential regulatory hurdles will help you navigate them more effectively. Work with your legal team to understand the regulations relevant to your particular business vertical.
Regulatory compliance in M&A is a critical aspect of the entire process. Getting approval for mergers is a complex, time-consuming process, which is why you’ll compile the necessary information before executing them.
Not checking the boxes can result in unnecessary and expensive delays that can be easily avoided. Anticipating potential regulatory hurdles will help you navigate them more effectively. Work with your legal team to understand the regulations relevant to your particular business vertical.
Since the US has a federal government system, mergers fall within the dual jurisdiction of the state and federal governments. Dealmakers must follow the regulations of the individual state where the seller’s company is incorporated.
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Regulatory Compliance in M&A Starts With These Organizations
The Securities and Exchange Commission (SEC) oversees the sales and transfers of securities and assets. Any issues relating to competition revert to the Federal Trade Commission (FTC). And the Antitrust Division of the Department of Justice (DOJ).
To get approval for the acquisition, the company may have to divest certain assets or agree to certain terms and conditions. That’s how you’ll comply with anti-trust laws.
If you intend to transact an overseas M&A deal, you’ll get approval from the Committee on Foreign Investments in the U.S. (CFIUS). This organization identifies and manages any risks to American national security resulting from foreign investment in local companies.
On the flip side, say you intend to acquire a foreign-based company. In that case, you’ll comply with the foreign direct investment laws and regulations applicable in that country.
Relevant Federal Agencies Monitor Different Business Sectors
Similarly, M&A transactions in any of the regulated industries must comply with the laws and regulations laid down by the relevant federal agencies.
For instance, say your intended transaction is within the medical or healthcare sectors. Accordingly, regulations laid down by the Health Insurance Portability and Accountability Act (HIPAA) will apply to the merger.
Here’s another example. Complying with environmental protection laws per the National Environment Policy Act is a critical part of business operations. Before entering into an M&A deal, you’ll conduct the necessary due diligence to explore the targeted company’s environmental impact.
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