On divestitures

When a company with a strong compliance program is set to acquire another company, a lot of effort goes into the integration of the new company. Those responsible for policies, training, controls, audits and investigations are all busy planning for Day 1. They understand the risks associated with any acquisition.

Perhaps far greater are the risks associated with a divestiture. The employees of the soon-to-be-divested business unit turn their attention to all the uncertainties of the future. Suddenly, complying with policies, completing the training, maintaining the controls and conducting the audits don’t seems like worthy activities. If the time to divest is short, the risks might be low. But if negotiations with the buyer stall, or worse fall apart, great damage has been dealt.

E&C professionals should carefully plan acquisitions. When it comes to divestitures, they should double those efforts.

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