One thing companies in an M&A state of mind should know about anticorruption due diligence is this: government enforcement agencies really, really like it.

When it’s done well, that is.

As a trio of Mayer Brown attorneys noted on a Thursday conference call, “thorough” due diligence in the context of a merger or acquisition will win points with regulators in both the U.S., home to the Foreign Corrupt Practices Act antibribery statute, and the U.K., which enforces its own Bribery Act.

“If your due diligence was thorough, then you will not get into trouble,” said partner Alistair Graham, summarizing the U.K. Serious Fraud Office’s stance on acquisitions in which anticorruption problems surface. The UK Bribery Act imposes strict liability on companies that do business in the U.K. and fail to prevent bribery on their behalf in any jurisdiction.

In the U.S., the Department of Justice and the Securities and Exchange Commission underscored the importance of M&A due diligence in the joint FCPA guidance document they released last November. But it’s got to be a serious, detailed effort on the part of the acquiring company. “The approach of ‘checking the boxes’ is not going to be viewed positively by either DOJ of the SEC,” said partner William Michael, Jr.

Given the monetary penalties, potential criminal charges, and reputational harm associated with breaking international antibribery laws, partner William Kucera said “it will be prudent to do at least some due diligence on anticorruption” as part of any M&A deal.

Kucera outlined four main points that can guide that process:

  1. In what country does the target company operate? Does that country pose a high risk for corruption? (A common measure is the Transparency International Corruption Perceptions Index.)
  2. Does the target company have much interaction with government officials?
  3. Does the target company employ third-party agents or brokers?
  4. What kind of anticorruption measures does the target company already have in place?

Kucera also recommended that buyers obtain anticorruption representations from the target company. For one thing, a representation can provide the acquirer with some measure of “good faith cover” should regulators examine the deal later, he said.

A representation may also provide the buyer with post-closing recourse in case further anticorruption issues are revealed after the transaction is completed.

But in employing any kind of “contractual solution” for anticorruption due diligence, Kucera warned that both parties should be prepared to answer a sticky question: “What to do with the information once it is known?” Buyers’ and sellers’ interests may not be aligned on a decision to report information to government regulators.

It’s also important to pay attention to the laws in the target company’s country. Countries including Brazil, Russia, India and China have their own antibribery statutes. Some countries have blocking statutes on the books, which can pose challenges to reporting anticorruption information to authorities in other nations.

If a U.S. company provides details to the Justice Department, for example, “you may in fact be violating the law of the [target’s] host nation,” Michael said.

For sellers, Kucera had this to say: “Act like a Boy Scout and be prepared.”

Sellers will want to be proactive in unearthing issues, Kucera said—not discovering anticorruption problems alongside the acquiring company. “If there are any issues, get out of ahead of the buyer,” he cautioned.

Anticorruption due diligence can also serve an important business purpose. If it turns out the target company’s current contracts were based on bribes, they won’t be any good to the buyer—meaning the target might not be worth as much as the buyer thought. “There may very well be a lessening of value if the acquisition goes forward,” Kucera said.