Mergers & Acquisitions Compliance Flashcards

In a cross-border acquisition, which international framework most directly governs anti-bribery compliance obligations for US-listed acquirers?

Answer: The Foreign Corrupt Practices Act (FCPA)

The FCPA applies to US issuers and their agents worldwide, making it the primary anti-bribery framework for US-listed acquirers in cross-border deals.

What is a 'carve-out' in the context of M&A compliance due diligence?

Answer: A provision excluding certain liabilities from indemnification coverage

A carve-out excludes specific known liabilities or issues from the indemnification scope, allocating that risk explicitly between the parties.

During integration planning, a compliance officer identifies that the target uses a third-party vendor flagged in a prior sanctions screening. What is the correct compliance response?

Answer: Conduct enhanced due diligence and escalate to OFAC counsel before continuing the relationship

Sanctions-flagged vendors require enhanced due diligence and OFAC counsel review before any decision is made to continue, modify, or terminate the relationship.

Which type of M&A structure generally provides the buyer greater protection from inheriting the target's undisclosed liabilities?

Answer: Asset purchase

An asset purchase allows the buyer to select which specific assets and liabilities to acquire, generally limiting exposure to undisclosed legacy liabilities.

What is the 'waiting period' under the HSR Act after submitting a pre-merger notification?

Answer: 30 days (15 days for cash tender offers), with possible early termination

The HSR waiting period is 30 days (15 days for cash tender offers), and the agencies can grant early termination or issue a Second Request to extend review.

A compliance officer is reviewing employment contracts of key target employees post-LOI. Which clause is most relevant to M&A compliance continuity?

Answer: Non-compete and change-of-control provisions

Change-of-control clauses may trigger severance or allow employees to exit, while non-competes affect talent retention and competitive risk post-close.

Which regulatory body must approve certain financial institution mergers in the United States beyond standard antitrust review?

Answer: Office of the Comptroller of the Currency (OCC), Federal Reserve, or FDIC depending on charter

Bank mergers require approval from the relevant federal banking regulator (OCC, Fed, or FDIC) based on the institutions' charter types, in addition to DOJ antitrust review.