“The Value of Entity Management” from Deloitte emphasizes the critical importance of sound legal entity management, including proper corporate subsidiary recordkeeping. In the context of M&A transactions specifically, which is often when subpar subsidiary management practices surface, the study shows that poor recordkeeping can – among other things - delay or prevent pending transactions, reduce deal prices, increase transaction and D&O liability risks, trigger less advantageous deal restructurings, substantially increase professional fees, and adversely impact the selling company’s credibility and integrity. The report, which is based on Deloitte’s interviews with leading M&A attorneys, as well as seasoned in-house M&A counsel, discusses and provides examples of how each of these potential deal risks manifests, and also notes the flipside, i.e., the upsides of good legal entity management practices.
See “Preventing corporate documents from sinking your subsidiary sale” (CFO Dive), “Poor 'Legal Entity Management' Can Lead to Big Dealmaking Headaches, Study Finds” (Corporate Counsel), and additional information & resources on our Subsidiary Management page.
This post first appeared in the weekly Society Alert!