July/August 2009 / Features
Insights From an M&A Monitor
The financial crisis has created a good climate for M&A according to the authors, but it also has given rise to heightened concern for systemic risk and overall skepticism of business. As a result, anticipate increased scrutiny of M&A transactions. Regulatory authorities often require divestiture of overlapping assets as conditions for merger approval. One of the tools often used to oversee divestiture commitments is the requirement that a monitor be employed.
General counsel and other C-level decision makers must incorporate effective strategies for working with a government-appointed monitor into their overall M&A strategic planning. Monitors are the eyes and ears of the antitrust authority. They are accountable only to the antitrust authority, but are retained by the merging parties. A three-way relationship is created. The monitor observes company behavior for the government, while also providing guidance to both merging parties about compliance. The government is the decision-maker, not the monitor. A good monitor has business and industry knowledge, familiarity with antitrust issues and transactions, the ability to leverage highly qualified local resources, and depth of experience in areas such as accounting, economics, corporate finance.
Being proactive in taking critical components of the M&A monitoring process into consideration should result in an effective monitoring arrangement.
