Industry research has indicated that close to 90% of companies transacting deals plan to conduct a background/integrity check to help identify potential problems before consummating their next acquisition, joint venture, or relationship with a distributor or licensee.
Government legislation such as the USA PATRIOT Act of 2001, Sarbanes-Oxley, Foreign Corrupt Practices Act, and Anti-Money Laundering programs require many institutions to become more sophisticated in managing their customer relationships, financial transactions, and equity positions. This has placed a spotlight on the need for dependable information and has made due diligence a critical, long-range compliance issue.
The growing trend of conducting detailed transactional due-diligence is fueled further by that fact that companies are quickly learning that it is more than “checking a box.” Investors are demonstrating a much greater awareness of the broader reputation and integrity issues that can impact business success. In fact, 75% of the companies surveyed by a Big Three consulting firm renegotiated the terms or structure or pulled out of the transaction of a possible merger, acquisition, equity investment, or business relationship as a result of information on the target company or its principals identified as a result of a background/integrity check.