Expert View
THE IMPORTANCE OF ESG IN
DEALMAKING By Jenny Burke,
corporate partner at Forbes
The importance of ESG is still on the rise and will only continue to grow.
ESG due diligence is a critical analysis of a company’s overall ESG performance. This involves a detailed look at the company’s sustainability practices and environmental impact, how it treats its employees and what policies define the running of the business.
Why is it so important? Recently, there has been a general shift towards more sustainable investments.
Investors are scrutinising ESG data when making decisions in relation to mergers and acquisitions, choosing to invest in companies which have a high ESG performance.
This behaviour is driven by factors such as the new Sustainable Finance Disclosure Regulation and increased government
falling further this year make it “credible” that M&A activity in the county will continue.
He sees that activity being driven by a range of factors such as market consolidation, strategic expansion and capital infusion. And he adds: “We believe Lancashire is poised for an upswing in M&A activity, signalling an end to one of the leaner periods for M&A in a decade.
“Whilst the strength and speed of the recovery remain uncertain due to lingering macroeconomic and geopolitical challenges, we believe we have reached a tipping point.
“We expect a steady increase in M&A as the year progresses. Indeed, a flurry of deals in the past few months suggests that this rise in dealmaking may already have started in some sectors.”
However, he adds a note of caution, saying: “Dealmakers will still encounter distinctly altered conditions.
“Notably, while credit markets have loosened, financing comes at a higher cost than in the past decade. This increased cost of capital will likely exert downward pressure on valuations, demanding that dealmakers work harder to generate value.”
Ryan reels off the reasons why Lancashire is attractive to companies looking to build their presence in the UK. They include its strategic location, strong industrial base, skilled workforce and record of innovation and research.
The there is cost. He says: “Compared to some other regions in the UK, like the south east, the cost of doing business
standards in relation to a company’s impact on the environment.
Ultimately, a strong ESG performance shows that a company is well equipped to deal with regulatory and environmental risks, making it more attractive to investors. ESG due diligence is a prime opportunity for companies to show just how well they are doing in this area.
When done efficiently, the outcome of ESG due diligence should provide a clear picture of whether a company is performing to ESG standards, and whether they are likely to provide strong financial results in the long-term.
So, in order to stay ahead of the curve, companies should be proficient at reviewing and updating their ESG policies and standards – even when there is not an imminent transaction.
in Lancashire is lower, particularly when including factors such as property purchase and rental costs. This cost efficiency can be an appealing aspect for companies looking to expand or optimise their operations.”
David Simmons, corporate finance partner at accountants and business advisors Azets, says the UK continues to be an attractive market for overseas buyers, despite political uncertainty.
However, he adds the business attracting attention tend to be larger companies or those offering a niche product or service.
He cites Forsberg Services, based in Heysham, as a prime example. The precision technologies provider was bought by Norwegian software business Teleplan Globe AS in January, for an undisclosed sum.
And he adds: “The North West remains a key geographic due to its entrepreneurial history and approach, strong professional community, as well as universities and transport links to the rest of the UK and overseas.”
Rob Richardson, corporate finance partner at MHA, says: “Overseas companies targeting the UK for acquisitions look for quality businesses with experienced management teams.
“The acquisitions of CMAC Group and Star Tissue, as well as Accrol’s expected takeover, highlight this. They are major international deals involving high-quality growing businesses which reflect very well on Lancashire as an economy.”
LANCASHIREBUSINES SV
IEW.CO.UK
Ryan Bilsborough Manager – corporate finance
/RyanBilsborough /PMMSolutionsfor
BusinessLLP
FINANCIAL DUE DILIGENCE GUIDES
THE BIG DECISIONS As acquisitive businesses look to capitalise on potential opportunities in the M&A world, understanding the nuances of financial due diligence is vital.
After the outline terms of a transaction have been agreed, the typical next step for a buyer is to undertake a process known as financial due diligence. This serves as a basis for the buyer’s decision-making regarding the viability of the transaction from that point onwards.
The process involves a series of requests, typically in the form of an extensive checklist or questionnaire from buyer to seller that, in essence, facilitates the examination of financial statements, cash flows and the assets and liabilities from which the former derive.
The main aims are to verify the initial assumptions made by the buyer regarding the transaction and potentially uncover hidden risks or discrepancies which may impact the viability of the deal.
Financial due diligence is labour intensive for both the acquirer and the vendor, and through the desire to progress the deal, sometimes known as ‘deal fever’, acquirers may be tempted to overlook potential red flags in pursuit of deal progression – potentially leading to costly oversights.
The outcome of financial due diligence provides an opportunity to clarify the initial assumptions underpinning the deal, or where required, revisit and potentially negotiate the transaction based on the true position of the target company.
Ultimately, financial due diligence is the cornerstone of acquirers’ decision making – providing comfort that acquirers, lenders, and advisers can confidently navigate the complexities of deal-making.
Arrange a free, confidential meeting by calling us on 01254 679131 or visiting
www.pmm.co.uk
23
DEALMAKERS
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78
