How Find Facts Fast Reduces Risk in Time-Pressed Merger Reviews

Notorious for their tight deadlines and high stakes, merger clearance reviews (including second requests) require organizations to process, review and produce large quantities of documents in a matter of only weeks or months. Recent activity and guidance across regulatory agencies in many jurisdictions worldwide have established a pattern of more aggressive, time intensive and costly clearance processes. This is occurring in tandem with an uptick in data volumes, stringent antitrust enforcement and an increase in the frequency of post-merger actions.

It's a challenging landscape for legal teams, particularly given the  pressure to conduct effective and timely discovery in response to a second request or other merger clearance investigation. With increasing volumes of information to be considered and shorter deadlines, organizations are often forced to turn over documents and other data before a fully comprehensive review has been conducted. Meanwhile, as regulatory authorities receive these document productions, they are leveraging sophisticated analytics to review them and uncover any number of potential antitrust concerns involving the merging parties or other market participants. This dichotomy leaves many legal teams with significant blind spots surrounding the exposures that could lead to later enforcement actions and follow-on class action lawsuits..

Recently, there have been several antitrust investigations into industries in which companies had previously sought merger approval. The timing of such investigations suggests that the regulatory authorities used data produced during the merger review to uncover potentially anticompetitive activity in the respective industries. Identifying and addressing these issues early, during due diligence and merger review, can help merging companies reduce downstream compliance risk. In the U.S. for example, the Department of Justice announced in October 2023 a new Mergers & Acquisitions Safe Harbor Policy, which provides a six-month grace period for acquiring companies to voluntarily disclose misconduct they discover during or after a merger, and “cooperate with the ensuing investigation, and engage in requisite, timely and appropriate remediation, restitution, and disgorgement,” to avoid penalty. The DOJ outlined that this is intended to “incentivize the acquiring company to timely disclose misconduct uncovered during the M&A process.”

To proactively reduce risks of antitrust liability following from merger activity (including awareness of compliance issues that may need to be disclosed), legal teams must embrace analytic review early on in the merger clearance investigations process. Doing so can help to provide a key sense of potential issues before documents are produced. This kind of early fact finding can allow legal teams to address evidence of potential misconduct, which may lead to downstream problems such as merger delays, non-merger investigations, post-transaction litigation or future compliance violations.

For example, FTI Technology’s Find Facts Fast methodology has been employed for numerous clients in the midst of a merger clearance review to provide an understanding of the documents’ content while supporting efficient and comprehensive response to regulatory requirements. This approach leverages experienced researchers, analytical tools and proven workflows to derive insights from specific document sets of interest, without the need for full review of a massive set of documents.

In numerous merger clearance reviews and other investigations, this approach has helped FTI Technology clients make critical decisions quickly and aid counsel in quickly developing an understanding of key facts and themes in a case. This has included the identification of key documents within the first few days of review, where in contrast, a full-scope first-pass review would have resulted in a gradual promotion of key documents and themes allowing counsel less time for analysis before critical deadlines.

The high-stakes second request and merger review process has become more complex  and riskier. With a Find Facts Fast approach, legal teams can gain critical insights early on and be better positioned to make strategic decisions during and after a transaction. 
 

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.