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Mergers & Acquisitions: Successor Liability and Trade Law

Past compliance with the full range of international trade, export controls, and economic sanctions laws and regulations should be a critical element of due diligence in mergers and acquisitions. Unfortunately, trade compliance is often overlooked. As in other areas of law, successor liability has been applied repeatedly to hold acquiring companies liable for export and import violations that occurred before the acquisition. Penalties for violations of these laws can exceed $1,000,000 per violation. In addition, remedying past violations can be time consuming and could potentially restrict the company’s future ability to export and contract with the government. As such, any company contemplating a merger or acquisition should ensure they have a framework in place to screen a target company’s export and import activities.

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