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Export Compliance Due Diligence

When considering purchasing a company, either foreign or domestic, it is important to consider the company’s export compliance history. By considering the products/technical data they manufacture and/or export, as well as any controls they have in place for those items, a purchasing company can understand what liabilities they are exposing themselves to by purchasing the company.

There are several key areas that should be investigated to get a clear picture of any potential export compliance liability. Potential buyers should know the product that is made/exported, and any known product classifications. The purchaser should also receive a general overview of who the seller’s customers are.  Any export licenses and agreements (i.e. MLAs) that have previously been obtained should be disclosed, as well as if the seller is registered with the State Department. Additionally, inquiries regarding controlled technical data should be made, and information as to who has access to it (purchasers, sub-contractors, foreign employees or visitors, etc.). Potential buyers should inquire about any compliance measures the seller has in place, like an export compliance manual or any training they have received. Finally, the potential buyer should ask if there have been any disclosures made to the State Department, Commerce Department, or other government agency regarding an export violation, and if any such agency pursued action against the seller due to a violation.

 

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