FOCUS 12
James Holley
Sustainability Services, Senior Manager T: +44 (0) 20 7896 4811 E:
james.holley@kpmg.co.uk
Waste, possibly surprisingly, has the potential to enhance a brand reputation and the value of a business, and should be factored into the valuation and due diligence process.
In M&A transactions, waste–even harder-to- manage waste products such as fats, oils and greases typically found in the food and drink processing industry–are increasingly being viewed as an asset rather than a liability.
As Karen describes we are seeing more innovative technologies coming to market that convert waste products into renewable forms of energy such as biodiesel, or other by-products, for example vitrifi ed marbles, which can be used in road making. In actual fact, these technologies not only help to enhance business value by reducing waste management costs, but are themselves attractive investment opportunities. Converting waste into an asset such as biodiesel is a great story and can also support a business’s green credentials and brand value.
Opportunities to focus on the value upsides presented by waste products are traditionally overlooked during a transaction’s
environmental due diligence processes, which typically focus on compliance with waste-related legislation. As a result, business value, potential or actual revenue streams, and favourable environmental credentials, are not being appropriately considered and factored into deal valuation and post-deal strategy.
Risk is also still a factor when viewed from this perspective, and should be considered as part of a due diligence exercise. There is a black market for certain waste products, such as pharmaceutical products in Africa, and buyers of a business should reassure themselves that the target’s waste management processes are robust and prevent their products getting into the wrong hands or polluting the environment.
By preventing waste in the fi rst place, businesses will become leaner and more profi table.
The below diagram demonstrates levels of European investment and M&A activity in the waste sector.
Singapore: 2 Deals - $385 million
$20.5 billion
Total investment
Source: International Financial Corporation/World bank Group
© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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WASTE NOT WASTED
Other: 12 Deals - $585 million
Poland: 1 Deal - $223 million
Netherlands: 1 Deal - $236 million
Ireland: 1 Deal - $424 million
Austria: 2 Deals - $249 million
U.S.: 4 Deals - $569 million
Germany.: 4 Deals - $1.1 billion
France: 10 Deals - $1.1 billion
Italy: 9 Deals - $1.4 billion
Spain: 8 Deals - $1.6 billion
U.K.: 42 Deals - $12.4 billion
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