PROFIT ESG IN M & A
“ Companies navigating this during an acquisition should embed all aspects of ESG into long-term growth strategies , making it core to their business strategy and not a separate topic . They should use wellreferenced frameworks and guidelines and may also want to consider external assurance to back up commitments and progress against ESG goals .”
KPMG ’ s Lalli adds that shareholders and management should be clear on the ESG strategy prior to launching a process , and crucially , they should identify the key ESG priorities and how they will be measured .
“ Being able to demonstrate progress against targets will be important to acquirors and their lenders , and the longer the period that metrics are measured , the better ,” he says .
Christof Huth also emphasises the need to have meaningful data to convince investors . " In times where it is extremely important for companies to be ESG compliant , green washing has become a problem – also for investors , making it more difficult to distinguish between actual sustainability leaders and those just claiming to be ,” says Huth .
“ Against this background , it is imperative to have data ready to back up the ESG claims made during the M & A process . Having an accurate picture about relevant environmental , social and governmental impacts of business activities , and benchmarks against the industry and competitors is mandatory to convince potential investors ."
Scrutiny and due diligence in ESG M & A Given the incredible impact ESG issues can have on a company ’ s valuation , the level of scrutiny should be as high , if not higher , as the attention given to its financials . Symons
says Deloitte recommends an end-toend ESG M & A approach from strategy and deal origination , through to due diligence , announcement , and integration onto postdeal , long-term value creation .
This is a sentiment echoed by Kleindienst at Roland Berger , who says the guidelines should not only be set for a successful acquisition but also for a successful holding period or post-merger integration . He says this is not always the case .
34 November 2022