Mitigating Money Transfer Fraud in M&A
Latham & Watkins’ Bret Stancil and Bridge Bank’s Heather Kelly discuss the steps dealmakers can take to ensure that merger consideration is delivered to payees in an age of widespread fraud risk.
In April 2022, a Delaware Court of Chancery opinion established that buyers may ultimately be responsible for ensuring merger consideration reaches security holders, even in circumstances where a buyer uses a third-party vendor to facilitate payments. The decision, coupled with a recent uptick in fraud, highlights the importance of heightened sensitivity to money transfer risks in M&A transactions and a comprehensive approach to mitigate the threat.
The risks are significant: Internet fraud resulted in losses of $6.9 billion in 2021, according to the FBI’s Internet Cyber Crime Center, with nearly $2.4 billion due to business email compromise. They are also particularly relevant during a significant liquidity event such as an M&A transaction. The sums of cash involved, the often hectic pace of the days leading up to closing and the number of parties involved make the M&A transaction a particularly attractive target for bad actors.
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This article was originally published by The Deal on November 8, 2022.
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Bridge Bank, a division of Western Alliance Bank, Member FDIC, delivers relationship banking that puts clients at the center of everything. Founded in 2001 in Silicon Valley, Bridge Bank offers a full spectrum of tailored commercial banking solutions, as well as specialized expertise focused on life sciences and technology and innovation companies, at every stage in their life cycle, through its offices in major tech hubs across the country. Bridge Bank also serves the private equity and venture capital communities and provides business escrow services. Bridge Bank is part of Western Alliance Bancorporation, which has more than $70 billion in assets. Major accolades include being ranked as a top U.S. bank in 2023 by American Banker and Bank Director. As a regional bank with significant national capabilities, Bridge Bank delivers the reach, resources and local market expertise that make a difference for customers.
