An important consideration when purchasing a business is protection against successor liability.  In cross-border acquisitions, successor liability under the Foreign Corrupt Practices Act (FCPA) is a growing concern.

The FCPA prohibits bribery of foreign officials for the purpose of getting or keeping business.  The definition of foreign officials if broad, and the act covers improper payments by agents, consultants and certain third parties working on a company’s behalf.  Penalties are severe and may include criminal sanctions.  Other consequences may include suspension or debarment from conducting business, loss of certain licenses and exposure to shareholder lawsuits.

It is not sufficient for the buyer to adopt FCPA compliance programs for the company following the closing.  Liability may extend to pre-closing activities.  Therefore, thorough due diligence is critical to avoid “buying an FCPA violation.”

International transactions are increasingly common in this global economy.  If you are considering a transaction, detailed planning, due diligence and assistance from professional advisors are vital to achieving success.

Mr. Haffey is a shareholder and member of the Board of Directors of Giarmarco, Mullins & Horton, P.C.  He has been recognized as a Michigan Superlawyer, a “Top Lawyer” by dbusiness magazine, and a “Top Attorney in Michigan” by the New York Times.