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Looking to buy? Be sure and complete your due diligence

Tom Fox | August 13, 2017

Most compliance practitioners are aware of Hallmark Number 10 in the Ten Hallmarks of an Effective Compliance Program, which discusses mergers and acquisitions in the compliance context. You need to perform an appropriate amount of pre-acquisition due diligence, so that you can adequately evaluate the FCPA compliance status of your target. Post-acquisition, you are required to perform a full forensic audit, while training personnel in the acquired entity and integrating them into your compliance regime.

 

Recently I came across another story, which provides an alternate way to considering this requirement and why you truly need to know what you are buying and most importantly why you are acquiring it. A recent report considers the spate of ultra-wealthy American businessmen who are interested in purchasing London football clubs. Most surprisingly, the interest is not in top-tier Premier League clubs but rather those that are in one of England’s lower tiers. The key metric for the purchase? It was “they wanted a team, effectively, as a vacation activity: one they could go and watch on a Saturday while their wives went shopping, before heading off to the theater.”



In addition to great shopping and theater, the other major requirement of the purchaser was there had to be an airport nearby that could accommodate several private aircraft so their wives could bring their girlfriends for a “girls day out” and get back in time to see the kiddies off to school on Monday in New York. London has other advantages than say some forlorn club in Manchester or Liverpool; the property values in London are much higher, so if the U.S. purchaser (or his wife) gets tired of the London scene and wants to jet off to Paris or the Riviera for a play date with the girls, well you can always unload real estate in London at a premium.

 

What is the biggest draw for these purchases? It all comes down to status. Cannot buy into the NFL, NBA, or MLB; tosh, just buy an English soccer club and live in a castle, at least for the weekend.