The DOJ recently announced a new M&A Safe Harbor Policy providing a “presumption of a declination” when companies “disclose misconduct discovered at the acquired entity within six months from the date of closing” and “fully remediate the misconduct” within one year. DOJ noted that certain facts and circumstances may justify extending these timelines. The new policy is Department-wide, so companies can expect individual DOJ divisions to tailor the policy to their own enforcement polices and framework.

This announcement is consistent with and formally adopts the DOJ’s existing approach to successor liability in M&A transactions. Deputy Attorney General Lisa Monaco (the “DAG”) openly acknowledged this, referencing the 2002 Opinion Procedure Release 08-02 (referred to as the “Halliburton Opinion Release”), which has long helped guide companies approach to post-acquisition due diligence. The new timelines are very similar to those articulated in Halliburton Opinion Release. Furthermore, DOJ has repeatedly emphasized the need for companies to conduct pre- and post-close due diligence to promptly identify, disclose, and remediate potential violations.

In addition to continuing emphasis on appropriate pre- and post-close due diligence and integration, companies are advised to review their M&A due diligence procedures to ensure they meet these now formalized post-close due diligence and remediation timelines, assess whether they have fully accounted for the range of compliance risks that fall under the policy, and monitor for additional guidance from individual DOJ divisions. Companies also are wise to engage experienced counsel early, particularly in complex and large transactions, which may not meet these timelines, thereby justifying an extension.

For more information please see our client alert.