The true cost, value or impact of environmental, health, safety, and sustainability (EHSS) management rarely appear on the financial statements of a business.
Yet acquisitions and mergers can saddle companies with unexpected EHSS liabilities and miss significant operational improvement opportunities. Unplanned cleanup costs, regulatory penalties, or capital improvements can dramatically undermine the value of a business transaction. Revenue growth opportunities used to justify an acquisition can be impaired or accelerated by regulatory compliance. And operational performance can be strengthened or weakened by the quality of EHSS performance.
For sellers, EHSS factors can also significantly affect the terms of divestiture. Transactions can be delayed or may even fail completely due to lack of clarity regarding EHSS risks and liabilities. Conversely, sustainability credentials that could help to optimize the value of a deal might be overlooked.
Investors, private equity firms, and corporations are increasingly seeking proof of robust EHSS management as part of their due diligence around mergers and acquisitions. Collating, presenting, and understanding this evidence, however, can be complex and time-consuming.
Keeping transactions on track
ERM has an unrivalled track record in supporting time-sensitive, multi-location due diligence efforts. We identify and quantify and prioritize current, contingent, and future EHSS exposures. Using probabilistic modeling, we provide investors with realistic estimates around the cost, timing, and cash flow implications of potential liabilities.
Our experience allows us to anticipate issues, enabling them to be proactively addressed before transaction timelines are impacted. ERM also identifies strengths and opportunities that can enhance the sale process and value of a divestment.
Our due diligence offering includes:
- An unrivalled global network of local experts, vital for transactions involving multinational sites;
- Deep industry experience as well as EHSS expertise;
- A holistic approach that looks beyond EHSS liabilities and risks to identify opportunities; and
- Experienced deal teams to help keep timelines and transactions on track.
Supporting smarter investments and decisions
ERM’s Due Diligence offerings inform and enhance mergers, acquisitions, and other business transactions by ensuring that EHSS issues and opportunities are accurately disclosed and anticipated.
With greater transparency, investors, lenders, and buyers can have confidence in the valuation model and their level of exposure. Sellers, meanwhile, benefit from a more competitive and accelerated sale process that maximizes their return and protects their interests by building EHSS into the terms of the transaction.