Cross-Border: Managing the Risks of Deals in Challenging Jurisdictions
Despite the rise of protectionism & other pressures on globalization, cross-border transactions continue to grow, and companies are looking beyond the developed world and considering deals with targets in more challenging jurisdictions. A recent interview with Akin Gump’s Christian Davis & Melissa Schwartz provides some insights on how to manage the risks associated with doing a deal in Africa, Central Asia & other “frontier” markets. This sidebar to the interview identifies some “red flags” that companies thinking of doing a deal in a challenging jurisdiction should keep an eye out for:
– Parties or controlling entities, or entities in the supply or distribution chain, are sanctioned parties or located in a geographic area subject to comprehensive sanctions.
– Parties involved have been subject to recent enforcement actions by or made voluntary self-disclosures to OFAC, Department of Justice or other agencies relating to sanctions, corruption or money laundering
– Products or technology involved in business are subject to export controls applicable to the jurisdiction
– Business sectors involved are subject to heightened regulatory requirements and/or enforcement
– Business includes extensive use of “middlemen” or third-party intermediaries, consultants, increasing the corruption risks
– Involvement of governmental entities as transaction parties or major customers
– Absence of foreign investment protections, whether through treaty and/or local law
– Lack of bilateral investment and/or tax treaties with the jurisdiction
-John Jenkins, DealLawyers.com September 25, 2019
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