{"id":44263,"date":"2017-08-01T04:11:36","date_gmt":"2017-08-01T02:11:36","guid":{"rendered":"https:\/\/newserver.fyb.de\/produkt\/private-equity-and-compliance-in-the-portfolio-or-why-should-private-equity-funds-pay-more-attention-to-compliance-in-their-investments-in-the-future\/"},"modified":"2017-08-01T04:11:36","modified_gmt":"2017-08-01T02:11:36","slug":"private-equity-and-compliance-in-the-portfolio-or-why-should-private-equity-funds-care-more-about-compliance-in-their-investments","status":"publish","type":"product","link":"https:\/\/www.fyb.de\/en\/produkt\/private-equity-and-compliance-in-the-portfolio-or-why-should-private-equity-funds-care-more-about-compliance-in-their-investments\/","title":{"rendered":"Private Equity and Compliance in the Portfolio or \u201cWhy Should Private Equity Funds Pay More Attention to Compliance in Their Investments in the Future?\u201d"},"content":{"rendered":"

Florian Hirsch\u00admann<\/strong> \u2014 Attor\u00adney at Law and Local Part\u00adner of the law firm White & Case LLP, Munich<\/p>\n

Prof. Dr. Chris\u00adtoph von Einem<\/strong> \u2014 Attor\u00adney at Law and Part\u00adner of the law firm White & Case LLP, Munich and Lectu\u00adrer for Entre\u00adpre\u00adneur\u00adship & Law, TU Munich<\/p>\n","protected":false},"excerpt":{"rendered":"

Compli\u00adance issues in target compa\u00adnies can place a heavy econo\u00admic burden on the acqui\u00adsi\u00adtion and the conti\u00adnua\u00adtion of the same. This is all the more true if, as a result of legal viola\u00adti\u00adons, there is a threat of fines and even liabi\u00adlity being impo\u00adsed on the inves\u00adtor, which is capa\u00adble of jeopar\u00addi\u00adzing the profi\u00adta\u00adbi\u00adlity of an entire busi\u00adness. The latter is now parti\u00adcu\u00adlarly the case in anti\u00adtrust law, which is why atten\u00adtion to compli\u00adance in this area deser\u00adves special attention.<\/strong><\/p>\n

The topic of compli\u00adance has incre\u00adasingly become the focus of public and corpo\u00adrate atten\u00adtion in recent years. If inves\u00adtors alre\u00adady ask private equity funds about their corpo\u00adrate social respon\u00adsi\u00adbi\u00adlity (CSR) policy during the fund\u00adrai\u00adsing process and check compli\u00adance with envi\u00adron\u00admen\u00adtal, social and gover\u00adnance (ESG) compli\u00adance stan\u00addards, what signi\u00adfi\u00adcance must compli\u00adance have in the port\u00adfo\u00adlio of private equity funds? Compli\u00adance is now the talk of the town in private equity. Thus, for private equity inves\u00adtors, carefully scree\u00adning a target company for poten\u00adtial compli\u00adance risks is no longer a ques\u00adtion of \u201cif\u201d but rather \u201chow\u201d.<\/p>\n

In this context, it is neces\u00adsary to assess which topics are parti\u00adcu\u00adlarly risky, how in-depth a due dili\u00adgence needs to be desi\u00adgned, and finally, to what extent conti\u00adnuous moni\u00adto\u00adring of the acqui\u00adred company\u2019s compli\u00adance is requi\u00adred in the period leading up to the exit.<\/p>\n

Compli\u00adance risks are all the more considera\u00adble for the private equity inves\u00adtor if, in the event of legal viola\u00adti\u00adons, the target company\u2019s liqui\u00addity dete\u00adrio\u00adra\u00adtes so massi\u00advely that it is no longer able to service the regu\u00adlarly high claims on the debt capi\u00adtal inves\u00adted or there is even a threat of liabi\u00adlity being passed on to the fund itself. Even if, as a result of compli\u00adance viola\u00adti\u00adons, only the profit expec\u00adta\u00adtion can no longer be reali\u00adzed or the target company can no longer be sold on the plan\u00adned date, the inves\u00adtor may find hims\u00adelf in serious distress.<\/p>\n

In the area of anti\u00adtrust law, the econo\u00admic risks have multi\u00adplied follo\u00adwing the deve\u00adlo\u00adp\u00adment of legis\u00adla\u00adtion and case law in recent years. Severe penal\u00adties are impo\u00adsed on indi\u00advi\u00addual compa\u00adnies, which, in view of their size, have even contri\u00adbu\u00adted to corpo\u00adrate insol\u00adven\u00adcies. Moreo\u00adver, the fines do not only threa\u00adten the company invol\u00adved in the cartel, but in some cases the parent compa\u00adnies or owners of entire groups.<\/p>\n","protected":false},"featured_media":18963,"comment_status":"closed","ping_status":"closed","template":"","meta":{"wp_typography_post_enhancements_disabled":false},"product_brand":[],"product_cat":[2452,2477,2516,2604],"product_tag":[1683,1890,1899,2106,2137,2155,2160,2169],"class_list":{"0":"post-44263","1":"product","2":"type-product","3":"status-publish","4":"has-post-thumbnail","6":"product_cat-ebook-en","7":"product_cat-florian-t-hirschmann-en","8":"product_cat-prof-dr-christoph-von-einem-en","9":"product_cat-fyb-2013-en","10":"product_tag-due-diligence-en","11":"product_tag-hirschmann-en","12":"product_tag-christoph-en","13":"product_tag-from-one","14":"product_tag-florian-en","15":"product_tag-compliance-en","16":"product_tag-antitrust-law","17":"product_tag-profitability","18":"pa_sprache-english-3","19":"pa_sprache-german","21":"first","22":"outofstock","23":"taxable","24":"shipping-taxable","25":"purchasable","26":"product-type-variable"},"yoast_head":"\nPrivate Equity and Compliance in the Portfolio or "Why Should Private Equity Funds Pay More Attention to Compliance in Their Investments in the Future?" - FYB Financial Yearbook<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fyb.de\/en\/produkt\/private-equity-and-compliance-in-the-portfolio-or-why-should-private-equity-funds-care-more-about-compliance-in-their-investments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Private Equity and Compliance in the Portfolio or "Why Should Private Equity Funds Pay More Attention to Compliance in Their Investments in the Future?" - FYB Financial Yearbook\" \/>\n<meta property=\"og:description\" content=\"Compliance issues in target companies can place a heavy economic burden on the acquisition and the continuation of the same. This is all the more true if, as a result of legal violations, there is a threat of fines and even liability being imposed on the investor, which is capable of jeopardizing the profitability of an entire business. The latter is now particularly the case in antitrust law, which is why attention to compliance in this area deserves special attention. The topic of compliance has increasingly become the focus of public and corporate attention in recent years. If investors already ask private equity funds about their corporate social responsibility (CSR) policy during the fundraising process and check compliance with environmental, social and governance (ESG) compliance standards, what significance must compliance have in the portfolio of private equity funds? Compliance is now the talk of the town in private equity. Thus, for private equity investors, carefully screening a target company for potential compliance risks is no longer a question of "if" but rather "how". In this context, it is necessary to assess which topics are particularly risky, how in-depth a due diligence needs to be designed, and finally, to what extent continuous monitoring of the acquired company's compliance is required in the period leading up to the exit. Compliance risks are all the more considerable for the private equity investor if, in the event of legal violations, the target company's liquidity deteriorates so massively that it is no longer able to service the regularly high claims on the debt capital invested or there is even a threat of liability being passed on to the fund itself. Even if, as a result of compliance violations, only the profit expectation can no longer be realized or the target company can no longer be sold on the planned date, the investor may find himself in serious distress. In the area of antitrust law, the economic risks have multiplied following the development of legislation and case law in recent years. 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