IS YOUR PRIVATE EQUITY FUND SEEKING A PLATFORM ACQUISITION?

A&M was retained to conduct environmental, health and safety (EHS) and environmental, social and governance (ESG) due diligence on a platform acquisition for a private equity fund. The target company was a global manufacturer of containers, parts and ancillary supplies in the waste industry. A&M was chosen due to our integrated EHS/ESG proposition, our focus on quantifying the financial implications of ESG risk and opportunity on business valuation, and our deep technical and operational expertise.

A&M’S ROLE

The purpose of A&M’s work was to confirm and support the target company’s valuation and satisfy the due diligence requirements of the various transaction stakeholders including the client’s investment committee, limited partners, lenders and insurance providers.

A&M’s scope of work was designed to identify EHS/ESG risks, develop strategies to mitigate any risks that were material to the transaction and identify and evaluate ESG-related optimization and value creation opportunities. The scope of work was staged to control costs and account for deal-specific cadence and typical target access limitations. Initial work involved a pre-bid review of the data room and public records to identify any red-flag issues and confirm the scope of work to be completed once exclusivity was achieved. Confirmatory due diligence consisted of management interviews, site visits, deep regulatory reviews, industry analysis, customer maturity assessments, competitor profiling and growth scenario analysis.

Pre-closing, A&M collaborated with the client to road map post-close value creation and optimization actions, as well as value preservation and risk mitigation strategies. Post-closing, A&M has been performing due diligence for add-on acquisitions and positioning them for integration into the platform.

OUTCOMES

A&M’s breadth and depth of services generated insights on the interconnectivity of risk and opportunity within the transaction, resulting in transformational business outcomes that would not have been possible to achieve outside of A&M’s integrated transaction approach.

1. Comprehensive Picture of ESG-related Risk and Opportunity: 
   By incorporating other due diligence workstreams (financial, tax, human capital and cyber/IT) the team developed a comprehensive assessment of ESG-related risks and opportunities within the business. This included evaluating environmental permitting, health and safety considerations, industrial hygiene matters, decarbonization goals and customer pressures against the backdrop of our client’s future business plans. The identified risks were quantified so that their impact on business valuation, integration considerations and capital expenditure (CapEx) to support planned growth and other factors could be considered.
2. Strategic Planning for Future Growth and Value Creation: 
   With input from the Client, our ESG advisory services team devised future growth scenarios, road-mapped value creation programs and developed risk mitigation strategies. These strategies were categorized into short-term (100-day), medium-term and longer-term actions and opportunities at both the corporate level and individual sites. This collaborative effort aimed to optimize the client’s growth potential while addressing ESG-related risks and capitalizing on value creation opportunities.
3. Consolidated ESG Journey and Add-on Acquisition: 
   As a result of the assignment, the team was asked to support the client in securing an add-on acquisition, expanding the company’s presence. In addition, a formal consolidated ESG journey was developed, ensuring that environmental, social and governance considerations could be integrated into the company’s operations, practices and decision-making processes.