(Westlaw业务) Following the collapse of Enron, WorldCom and several other major multi-national companies, the capital markets experienced the Era of Accountability 1.0, which included the passage of Sarbanes-Oxley (“Sarbox”) 在 2002. Sarbox brought new standards for conduct and governance to public company boards of directors and officers, new and more stringent reporting requirements, stronger internal controls and stiffer penalties for non-compliance. It also influenced the focus and depth of M&A due diligence standards, which began to take deeper dives into issues of financial reporting, objectivity and verification.

Less than a short eight years later, we have entered the Era of Accountability 2.0. The election of Barack Obama and the Administration’s commitment to transparency, the role of government in bailouts, including TARP, the failure of banks and automobile companies, the Madoff scandal, the severe global recession and mistrust in Wall Street collectively are contributing to an increase in staffing at the Securities and Exchange Commission (美国证券交易委员会), the expectation of vigorous government enforcement activities in a variety of areas, and the possibility of new GAAP standards. These evolving developments in turn are elevating, expanding and refining the portfolio of due diligence best practices in M&一, financing and other core business transactions.

I am not implying that graduation from 1.0 到 2.0 involves a tectonic shift in due diligence best practices. M&A practices and documentation generally are continuing to evolve in small increments. There are occasional exceptions, such as the fairly rapid and widespread move to electronic data rooms. And responses to sweeping legislative and regulatory developments are necessarily fast-paced. The adaptation of acquisition agreements and processes to the pre-acquisition notification requirements of the U.S. Hart-Scott-Rodino Antitrust Improvements Acts of 1976 is a notable example.

The government intervention of the last year triggered in large part by excesses that exploited a flawed regulatory regime is so sweeping, fueled by intense and enduring public outrage, that due diligence best practices inevitably will respond to the challenges of a more highly regulated economy in which buyers and sellers must live under the microscope of vigorous government enforcement and intense public scrutiny. This response in large part should encompass a reaffirmation of existing best practices. 因此, much of our discussion below emphasizes these practices as prevailing in the Era of Accountability 1.0. Although the anticipated changes in practices are likely to be incremental, in the context of ever-expanding government regulation and enforcement activities, the new environment merits a 2.0 designation.

通过 Guest Analysis: Due Diligence in the Era of Accountability 2.0.