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The AMA Handbook of Due Diligence by Andrew J. Sherman, William M. Crilly

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Regulatory Matters - Forms 17-12 And 17-13
Increasing regulation appears to be a fact of life in our economy. Therefore, it is important to understand both
the current and potential future impact of these regulations on the entity’s productivity and cost levels.
The impact is not limited to federal regulation. Differing state and local regulations are bringing about major
geographic shifts in job opportunities as employers relocate to areas with less restrictive regulations.
Regulatory Compliance Actions Form 17-13, provides for recording the nature and resolution of any regula-
tory compliance actions taken against the entity.
Officers’ And Directors’ Background Information - Form 17-14
The rationale for the questions posed in this form are obvious.
T
rend In Legal Department Staffing And Expenses - Forms 17-15 And 17-16
The dual trends of increasing regulation and increasing litigation are making it very difficult for firms to con-
tain their legal expenses.
WHAT TO LOOK FOR
Are legal expenses increasing faster than net revenues?
If so, are the increases primarily the result of increases in the internal staff or in the utilization
of outside legal counsel?
WHAT TO LOOK FOR
Do the number of past actions, if any, appear excessive for a company in the entity’s industry?
If so, what appears to account for this situation?
Are there any unresolved actions? If so, what is the anticipated resolution and its impact on
future costs and/or operations?
WHAT TO LOOK FOR
What is the current impact of government regulations on the entity’s cost levels?
What is the anticipated future impact of these regulations on cost levels?
Do the current regulations place the entity at a competitive disadvantage vis-a-vis its competitors?
Do anticipated future regulatory trends suggest that consideration be given to relocating some
or all of the entity’s facilities?
DUE DILIGENCE HANDBOOK 17-03
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