Acquirers should check firms’ green risk, states report

By Karen Carstens

Date: 03/06/04

AS MANY as one in three European firms in certain industry sectors are caught out by unexpected environmental, health or safety risks after concluding mergers or acquisitions, according to an analysis by professional services firm KPMG.

Better management and control of environmental due diligence during transactions can significantly reduce risks to acquirers, it claims.

KPMG surveyed 105 of the 500 biggest European quoted companies.

Around two-thirds of the sample were classified as "high-risk", including firms in the chemicals, aerospace, automotive, metals and diversified industrials sectors. The others were all classified as "medium risk", including electronic, health, IT, finance and tobacco companies.

Acquirers need to ensure they have a technically robust environmental due diligence team, KPMG recommends. The team should focus on how the environmental issues identified impact on business performance including profit and loss, balance sheet and cash flow. It should also share its findings with financial, legal, commercial and possibly operational due diligence teams.

Some 95% of respondents agreed that environmental, health and safety issues could have a material impact on reputation and brand although only 30% of them adapted their environmental due diligence to take account of them.

According to a report by KPMG, one in three firms in certain industry sectors face unexpected environmental, health or safety risks after concluding mergers or acquisitions.

http://www.kpmg.com/Rut2000_prod/Documents/9/WEB%20EDD.pdf http://www.kpmg.com/Rut2000_prod/Documents/9/WEB%20EDD.pdf

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