Due Diligence Rules of Engagement

By Joe Aberger

Until the deal closes, two companies are fully independent competitors and everyone involved in integration planning needs to understand exactly what that means in practice. There should be a hard, unambiguous line around what is and isn't permissible during the pre-close period, and it should not leave room for interpretation. 

For the acquirer and acquiree, there can be:

• No coordination on pricing, customer strategy, market positioning, or competitive responses. 
• No influencing the other party's business decisions, product development initiatives, hiring plans, or customer outreach activities. 
• No early integration of any operations, systems, workflows, or business processes before legal completion of the transaction regardless of how much easier it would make the post-close integration and regardless of how confident everyone is that the deal will close on schedule. 
• No joint participation in trade associations or industry forums.
• No representations that the two companies have common ownership before they legally do.
• No agreements or suggestions that either company refrain from pursuing business activities or initiatives.
• No actions, direct or indirect, that could be construed as coordinating commercial behavior between two entities that are still legally required to compete independently. 

Competitively sensitive information is subject to the tightest controls. It can only be shared with Clean Team members who have been formally designated and briefed on their obligations, and even then only to the extent strictly and demonstrably necessary for integration planning activities that genuinely cannot be completed after close. 

A data harvesting process should be followed: how to submit data requests through the proper channel, how information gets classified into one of three categories (restricted information, competitively sensitive information, or general party information that can be shared with all integration team members), and how approved data flows appropriately into the designated folders of the Virtual Data Room where access is controlled and audited. 

The rules here aren't bureaucratic obstacles designed to slow down integration planning. They're what keeps both companies out of antitrust enforcement actions and protects every individual involved from personal legal exposure that can haunt them long after the integration is complete. Follow the guidance without exception, without shortcuts, and without assuming that a violation is too small to matter.