Transaction Support on Environmental, Health and Safety Issues

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Consideration of EHS (environmental, health, and safety) opportunities and risks has become customary during the due diligence and transaction process. Whether a company is completing an acquisition, turning around a business, restructuring or divesting itself of assets, PwC can shed light on key environmental and social matters that are critical to creating a sustainable business and protecting shareholder value.
 

  • I represent an investment fund that will acquire a company whose activities probably involve environmental risks and risks to our reputation. How do we measure such risks and reflect them in out business plan and ROI calculations?
  • My company is considering disposing of a business to an investment fund. How do we make sure that the environmental risks and future compliance costs are properly addressed and will not negatively affect our ability to sell this business?
Our service offerings meet the needs of both asset buyers and asset sellers, as well as management involved in asset structuring/integration following completion of a deal:

Buy-side due diligence

PwC's environmental, health and safety and reputation (EHSR) transaction support typically involves:

  • Advising on the appropriate scoping of EHSR due diligence
  • Reviewing available information, including data room material, undertaking site visits, holding management meetings and assessing information provided by third parties
  • Identifying and characterising EHSR risks and liabilities and their effect on the business plan, purchase price, capital expenditure requirements and so on; and
  • Advising on the use of risk-mitigation measures (for example, via sale and purchase agreements, environmental insurance policies or other risk-transfer mechanisms).

Post-deal services

Having developed an understanding of the EHSR risks attaching to a particular asset purchase via the due diligence process, the purchaser will need to ensure that identified (or subsequently identified) risks are appropriately managed after the deal is completed. This may involve:

  • Intensive management of “hot” post-deal issues, including those risks or liabilities that may come to light following inadequate due diligence, or that were not managed appropriately through the sale and purchase agreement or other risk-transfer mechanisms
  • Integration of EHSR management-system arrangements
  • Development of appropriate capacity to generate EHSR management information to meet the disclosure requirements of the new owner
  • Implementation of longer-term environmental improvement projects (for example, pollution abatement/clean technologies and remediation projects)
  • Insurance recovery investigations to identify existing insurance policies that may cover historic and future liabilities; and
  • Advising on the financial accounting implications of any acquired liabilities (for example, a review of provisioning models).

Vendor due diligence

In seeking to maximise the value of an asset sale, the vendor must be prepared to supply an appropriate level of credible information to prospective purchasers. The vendor must maintain control over the generation and management of EHSR risk information in order to:

  • Ensure that it can respond robustly to the concerns of prospective purchasers
  • Ensure that it can respond efficiently to requests for information from the purchaser; and
  • Avoid generating information that provides the purchaser with an inaccurate picture of the situation and thus hampers the progress of the deal or has an adverse impact on the asset’s value.
 
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