Close X
Attorney Spotlight

What emerging trend in shareholder litigation does Britt Latham find most interesting in his practice today?    Find out more>


Close X


Search our Experience

Experience Spotlight

Envision to Sell to KKR for $9.9 Billion

We represented Envision Healthcare Corporation (NYSE: EVHC) in its definitive agreement to sell to KKR in an all-cash transaction for $9.9 billion, including debt. KKR will pay $46 per Envision share in cash to buy the company, marking a 32 percent premium to the company's volume-weighted average share price from November 1, when Envision announced it was considering its options. The transaction is expected to close the fourth quarter of 2018. Read more

Envision Healthcare

Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

Six Things to Know Before Buying a Physician Practice spotlight

Dermatology, ophthalmology, radiology, urology…the list goes on. Yet, in any physician practice management transaction, there are six key considerations that apply and, if not carefully managed, can derail a transaction. Download the 6 Things to Know Before Buying a Physician Practice to keep your physician practice management transactions on track.

Click here to download the guide.

FCPA Resource Guide Action Items, Issue 5 - Mergers, Acquisitions and Joint Ventures


January 15, 2013

This alert, the fifth in our series addressing the Resource Guide to the U.S. Foreign Corrupt Practices Act (available here) that was jointly released by the Department of Justice ("DOJ") and Securities and Exchange Commission ("SEC") on November 14, 2012, provides: (1) a summary of DOJ and SEC's enforcement positions with respect to successor and joint venture liability; (2) recommended pre-acquisition due diligence steps; and (3) recommended post-acquisition integration steps.

Prior Issues in this Series

Issue 1 - Top DOJ Official Elaborates on New FCPA Resource Guide
Issue 2 - Elements of Compliance Programs
Issue 3 - Relationships with Third Parties
Issue 4 - Gifts, Hospitality and Entertainment

Successor and JV Liability

As with other aspects of FCPA enforcement, the Resource Guide re-affirms DOJ and SEC's position that acquirers can be held liable for FCPA violations committed by their targets: "[s]uccessor liability applies to all kinds of civil and criminal liabilities, and FCPA violations are no exception."

Consistent with the emphasis on voluntary disclosure which permeates the Resource Guide, DOJ and SEC point to the potential for declinations (and other alternatives to guilty pleas) when an acquirer voluntarily discloses past violations by the predecessor company, remediates the conduct, and cooperates with enforcers. In the acquisition context, however, DOJ and SEC also emphasize that they frequently pursue enforcement actions against only the predecessor company - rather than the acquiring company - thus enabling the acquiring company to avoid potential debarment and other negative repercussions associated with a guilty plea. This is often cold comfort to a company whose new acquisition is devalued by a corporate criminal conviction.

The Resource Guide also reiterates that an issuer can be held responsible for accounting violations of its joint venture partners. Specifically, an issuer can be held directly liable for the "fail[ure] to have adequate internal controls and fail[ure] to act on red flags indicating that its affiliates were engaged in bribery." As reflected in the text of the FCPA, however, if a company owns less than 50% of a subsidiary or affiliate, the company is required only to use its "best efforts" to implement adequate internal controls.

Pre-Acquisition Action Items

Given the high costs of an FCPA enforcement action (including investigation, defense, and collateral litigation costs) and the devaluation that often follows an enforcement action, the Resource Guide stresses the importance of pre-acquisition anti-corruption due diligence. Not only can such due diligence prevent the company from buying a corrupt business, the Resource Guide suggests that good faith due diligence efforts can help prevent a criminal prosecution in the event that due diligence fails to catch an existing problem.

Though the Resource Guide does not mandate particular due diligence steps, a company negotiating the acquisition of a foreign target should consider the following action items:

  • Determine the extent of the target's international operations, including agents, distributors, and sourcing;
  • Have the company's legal, accounting, and compliance departments review the target's sales and financial data, its customer contracts, and its third-party and distributor agreements;
  • Perform a risk-based analysis of the target's customer base;
  • Perform an audit of selected transactions engaged in by the target;
  • Engage in discussions with the target's general counsel, vice president of sales, and head of internal audit regarding all corruption risks, compliance efforts, and any other major corruption-related issues that have surfaced at the target over the past 10 years; and
  • Seek, in particularly difficult cases, an opinion release from DOJ (which SEC also honors).

Post-Acquisition Integration Action Items

The Resource Guide also emphasizes the importance of swiftly integrating an acquired company into the parent's compliance program and remediating any problems that were not discovered until after the acquisition has closed.

In particular, DOJ and SEC encourage companies to take the following steps after acquisitions:

  • Ensure that the acquiring company's code of conduct and anti-corruption compliance policies and procedures apply as quickly as is practicable to newly acquired businesses or merged entities;
  • Provide anti-corruption training to the directors, officers, and employees of newly acquired businesses or merged entities (and to agents and business partners, when appropriate);
  • Conduct an FCPA-specific audit of all newly acquired or merged businesses as quickly as practicable; and
  • Disclose any corrupt payments discovered as part of its due diligence.

These steps may decrease the likelihood of an enforcement action even "when pre-acquisition due diligence is not possible."

Next in the Series

In our final installment of this series, we will address confidential reporting and responding to red flags and reports, including through internal investigations.

In Case You Missed It:

Related Services


Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.