The Art of the Deal? No! The Art of Anticipation is more like it. Anticipating issues on the ground is easier if one has an understanding of the deal itself and its objectives. So by understanding the following, one can anticipate and shore up possible pitfalls:
Scope of Work: One of the more obvious points (we know, trust us). However, scopes of due diligence vary depending on whom one is representing. Sellers, buyers and financial institutions have their own guidelines and objectives. Also, the type of transaction can affect the due diligence approach.
Type of Operations(s): One size due diligence does not fit all. Site reconnaissance is all about anticipating what may or may not be present based on the type of facility it is. Manufacturing? Distressed real estate? Deferred building maintenance often results in mold from water damage, damaged asbestos containing materials, PCBs & dilapidated lead based paint. Anticipating possibilities not only protects the acquirer long term but may also serve as negotiating leverage.
Timing (or lack thereof): To quantify an operations’ environmental compliance posture and outstanding environmental liabilities in short order is part of the business we have chosen. So, a wise move is to get ahead of the information as best as practical. Previous studies, knowledge of the industry, area and regulatory agencies – submit information requests to all appropriate parties on the front end. Anticipate data gaps and relay to the deal team/client.
Deal Team Participants – Each Have Their Own Perspective and Duty: Team members such as legal, finance and other advisors will want and need to review the environmental due diligence for not only their input but often times sign-off as well. Anticipate the time that will be required, the perspective and risk sensitivities they bring to their representation.
The McGovern Group has extensive experience conducting pre-acquisition environmental and building due diligence programs. Call with your questions. We look forward to having a conversation!