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Four Tips to Reduce Risk in Your Transactions

Jeffery Phillips February 29, 2024

Business transactions can be risky, especially when it comes to mergers and acquisitions or joint ventures. Financial, operational and legal risks have always been a part of the equation, but new trends are coming to light.  

Executives must consider how the global business environment and economy will weigh on the companies involved. Regulations are constantly changing and the dynamics of markets around the world are constantly in flux.  

These modern trends must enter the conversation when managing transactional risk.  

  • Increased scrutiny on due diligence: While it typically includes a thorough assessment of legal, financial, sales and marketing, and human resources practices and documents, due diligence is expanding into cyber risk assessments. It also may include a deeper evaluation of operational risks to include environmental, social and governance practices.  
  • Environmental, Social and Governance (ESG): Since ESG was introduced in 2006, it has become necessary for many companies to define how they treat people and the environment during the course of doing business. Furthermore, it has become an important value for consumers as they decide who they will do business with.  

Companies should pay strict attention to how they incorporate ESG in their own operations, as well as how it is included in any business they work with. If a company doesn’t have a robust ESG presence, it could increase the transactional risk.  

  • Regulatory compliance: Laws are constantly changing for businesses around the world. Stay on top of the regulations and avoid risk by making sure any company you are doing business with or considering acquiring is in compliance with laws surrounding antitrust, data protection, and any other regulations specific to the industry.  
  • Crossing the border: Doing business with foreign companies has always been difficult with differences in laws and regulations. Companies doing business with firms abroad should continue to abide by any changes and closely follow those rules in areas such as foreign investment controls, currency fluctuations and political instability. 

Modern business deals are complex. Transactional Risk Advisors and Oswald can help you wade through the nuances of this evolving risk landscape.

To learn more, contact me below:

Transactional Risk Advisors