Do Your Export Control Due Diligence Before The Acquisition: Don't Buy An Enforcement Action
- Topics:
- Acquisitions
- Tags:
- Acquisition,
- Business Operations,
- Corporate Law,
- Diligence,
- Finance,
- Government,
- Investment,
- Mergers & Acquisitions,
- Regulations
- Source:
- Reed Smith
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Overview: The old adage “let the buyer beware” holds true in the context of mergers and acquisitions of companies engaged in international sales and the export of products and technologies. The U.S. Department of Commerce recently settled a case against Sigma-Aldrich Corporation, a life science, and high technology research company, for violations of U.S. export control laws committed by a company, which it had acquired. Significantly, the violations began before the acquisition but were not discovered during due diligence. The Commerce Department has made clear that it will vigorously enforce export control laws, and will hold successor companies accountable for the violations of acquired companies. Clearly, due diligence in the context of a merger or acquisition must confirm that the target company has all the necessary licenses to carry on its business and is in compliance with all applicable laws. The potential for liability for export control violations can be minimized by conducting thorough due diligence of a target company’s compliance with export controls and other trade-related laws and regulations, such as the Foreign Corrupt Practices Act, Anti-boycott regulations, and customs and import regulations. An acquirer’s due diligence should include: review of all international transactions and international business strategies, both current and planned and also, review of all export and import licenses, authorizations, registrations, or exemptions held by the target.
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Format: PDF | Size: 33KB | Date: Jul 2003 | Pages: 2
