A target with an enforcement history brings obligations that may not appear in a liabilities schedule.
Diligence. Enforcement actions, consent orders, examination reports, matters requiring attention, internal audit findings, whistleblower reports and their disposition, and open investigations. Request the underlying correspondence, not summaries.
Consent order obligations. Whether they bind successors, whether the transaction requires regulatory notice or approval, and whether the acquirer must assume the undertakings. Regulators frequently condition approval on the acquirer assuming them.
Successor liability by statute. Environmental, employment, tax and certain regulatory regimes impose successor obligations regardless of the transaction structure.
Approval conditions. Applications for change of control are assessed partly on the acquirer’s ability to remediate the target’s issues, and a credible remediation plan submitted with the application shortens the process considerably.
Pricing and protection. Specific indemnities with their own caps and survival periods, escrow sized to the exposure, and where the exposure is quantifiable, representation and warranty insurance — which typically excludes known matters.
Integration. A defined remediation programme with owners and dates, reported to the acquirer’s board, beginning at closing rather than after the first examination.