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DOJ Opens A New Safe Harbor For Mergers And Acquisitions


On October 4, 2023, the U.S. Department of Justice (the “DOJ”) announced a new Mergers and Acquisitions Safe Harbor Policy (the “Policy”).[1] With the implementation of the Policy, the DOJ hopes to avoid discouraging potential acquirers, who possess effective compliance programs, from acquiring companies who have ineffective compliance programs and a history of misconduct. The Policy provides, in relevant part, that the DOJ may grant an acquiring company a presumption against prosecution, if the acquirer, in a bona fide arms-length M&A transaction, takes the following actions:

(i)  Voluntarily disclose misconduct within an acquired entity within six (6) months of closing whether that misconduct is discovered pre- or post-closing,

(ii)  Cooperate with any ensuing DOJ investigation related to the misconduct,

(iii)  Fully remediate the misconduct within one (1) year of closing, and

(iv)  Pay any applicable restitution or disgorgement related to the misconduct.

The Policy does not provide protection for information regarding misconduct that was already required to be disclosed, public knowledge, or known by the DOJ. However, the Policy does eliminate successor liability. Furthermore, the Policy is available to acquirers regardless of whether there were aggravating factors at the acquired entity and ensures that any misconduct covered by the Policy does not get factored into any recidivist analysis for the acquiring company at any time.

Key Considerations

Though the Policy does provide significant benefits to potential acquirers by, among other things, providing a safe avenue to acquire companies with a higher risk profile, a fact-intensive analysis ought to occur before an acquirer should avail themselves of this option. Chief among the considerations a potential acquirer should keep in mind are that:

(i)  The Policy is not a substitute for quality due diligence, in fact it reinforces the need for robust due diligence during the dealmaking process, in order to identify and address issues in a timely manner,

(ii)  The DOJ has the sole discretion to determine what constitutes “full” remediation and “full” cooperation,

(iii)  The Policy does not eliminate the risks posed by potential collateral issues like civil litigation, parallel investigations (particularly in foreign jurisdictions), and regulatory actions,

(iv)  The payment of penalties, restitution, and disgorgement owed under the Policy may still be significant, and

(v)  Alternative safe harbors still exist within the DOJ, one of which may be preferrable for an acquirer’s particular circumstances.


Following the unveiling of the Policy, potential acquirers in a M&A transaction can take steps to position themselves to be potential beneficiaries should there come a time that they need to avail themselves of this safe harbor. Specifically, potential acquirers can:

(i)  Ensure that compliance personnel play a prominent role in the dealmaking process to ensure that any issues are identified early, so the associated costs and risks can be incorporated into the deal terms,

(ii)  Develop integration procedures prior to closing that prioritize the quick identification of issues and the swift integration of compliance structures, and

(iii)  Consider how to integrate potential remedial actions in the deal terms, including the use of compensation claw backs, to offset the burden of any potential disgorgement or restitution that may be required under the Policy.

A new policy from the DOJ always presents new opportunities and questions for companies and actors in the market and the attorneys at McGrath North are prepared to assist you in navigating the constantly evolving regulatory and enforcement landscape and to provide answers for all your merger and acquisition needs.