M&A Environmental Due Diligence Support
Issue: A client is selling their business to a larger company that routinely grows through acquisitions. While the client has effectively managed environmental compliance and safety to minimize risk in their operations, they lack experience with the due diligence process that accompanies such transactions. Satisfying the purchaser that environmental and safety risks are well managed and that the business has the approved, permitted capacity to support growth projections are new challenges for the client. If the due diligence process is not properly managed, the timing and the value of the deal could be negatively impacted. Typically, the confidential nature of the due diligence process also adds complexity to the widespread use of internal resources for support during this process.
Solution: Connolly Advisors has an approach that prepares our clients for the due diligence process to prevent delays in closing the deal and minimize the chance that unforeseen risk will negatively impact the value of the deal.
Conduct an Initial Readiness Assessment: Connolly Advisors will develop an understanding of the business and its regulated attributes. We use a standard environmental due diligence checklist to determine how ready the business is to enter the process. To protect internal confidentiality, the readiness assessment can be communicated within the business as an environmental compliance review.
Organize Data and Documents: Data sources are organized in a readily searchable format for the anticipated look-back period. This organized set of documents will establish a record of compliance and support a demonstration of no significant contamination or future non-compliance risk.
Prepare to answer questions: M&A due diligence processes generate a large number of questions. Preparing answers ahead of the questions will allow time to fill gaps in the company record and to obtain other necessary supporting data.
Develop Support Plan: Clarify the goals of the client with the environmental due diligence process and based on the state of client resources, develop a plan to provide the support necessary to ease the process. Connolly Advisors will keep the client informed on the issues by communicating details of support activities throughout the process.
Communicate Results, Goals and Progress: Readiness state is communicated in a written report containing recommendations on how to improve the state of readiness. Specific improvement items can be assigned to internal resources or supported by Connolly Advisors team members. Progress reports towards readiness can be submitted at a cadence desired by the client.
The advantage of hiring Connolly Advisors is to have subject matter experts who are experienced in both sides of mergers and acquisitions – adding value through environmental health and safety due diligence. Our experience allows us to prevent environmental risk from reducing the overall value of the transaction through presentation of well-organized documents and records, preparation of staff to answer questions, and prevention of unexpected requests, questions, and issues.