There has been a growing spotlight on technology companies and their failure to comply with regulation in recent years. Access Partnership’s panel, led by Maria Zervaki, aimed to tackle this issue by discussing the economic benefits of regulatory compliance with Marc Samuel (Partner, DLA Piper; M&A transactions specialist), Juan Cacace (Head of Practice, Compliance and Market Intelligence, Access Partnership), and Mike Hazzard (Partner, DLA Piper; telecommunications specialist).
The panel observed that regulatory compliance plays an integral role in the global and commercial success of companies, small and large. Businesses should view compliance as having an important part to play in every step of their life cycle.
Mike Hazzard pointed out that businesses usually focus on developing their product/service as fast as possible, without considering the regulatory issues they may be subject to, ranging from telecommunications licensing to data privacy to employment law. This oversight can lead to numerous operational and financial problems down the line, with companies having to pay fines, delay product/service launches, and even discontinuing their services in certain markets. Less tangibly, companies may face reputational scrutiny and lose customer trust. This is particularly damaging for smaller businesses, who are less dominant in the market and may have fewer resources to mitigate the consequences of non-compliance.
In order to get ahead of this problem, panellists agreed that companies should view regulatory compliance as part of their infrastructure. It should feature in the company’s planning process and should be considered and evaluated before the company starts to provide products/services and before it starts to commercialise.
As the panellists put it, many companies do not consider the importance of compliance until they have a potential buyer. By this point, playing catch-up can cost a business money and time. While Marc Samuel pointed out that he does not often see non-compliance issues significantly hold up the timeline of M&A transactions, such matters do make a company look unprofessional to buyers. He went on to say that buyers generally understand that full regulatory compliance is a privilege of large and wealthy companies and are willing to work out the details as part of the deal. However, companies should demonstrate their dedication to staying on-top of regulatory issues and at the very least, illustrate their awareness and knowledge of the topic.
How can a company easily stay compliant?
There was a consensus among panellists that the benefits – be it economic, operational and reputational – of regulatory compliance far outweigh the risks of not doing so. Part of building a global business is adhering to regulation and as Juan Cacace rightly emphasised, compliance should be understood as an investment for the business, rather than a cost.
There are some simple things businesses can do to remain compliant. Marc Samuel pointed out that companies should take a holistic and global approach and review regulation that might apply to them on an annual basis. Mike Hazzard and Juan Cacace highlighted that companies should aim to get high quality advice on regulation, whether this is achieved by hiring someone as part of the team who can navigate these conversations or seeking expertise externally.