Green deals: The role of sustainability in M&A
What a global pandemic is teaching us about potential for sustainable M&A
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COVID-19, global lockdowns, and the resultant economic downturn are changing how we do business. The emergency stop executed by the global economy has also slashed pollution and CO2 emissions. Businesses and governments are questioning over-extended global supply chains.
Even once the current crisis is over, we can expect some kind of ‘new normal’ in place, nudging the world closer to a more sustainable future. The pre-existing high profile of the climate crisis, plastic pollution and sustainable work practices is certain to come into sharp focus in 2021 and beyond.
Sustainability will become a critical part of M&A in the future. It could reshape regulation and how business risk is viewed. We see this having a major impact in three areas:
- Businesses that can demonstrate good sustainability practices will be worth more. Customers will be more loyal, and companies will command a premium for products and services and face lower regulatory costs.
- Data showing sustainable practices will lower the risk for buyers – giving them confidence on everything from environmental liabilities to possible PR nightmares – potentially boosting multiples.
- And the M&A process itself will benefit from becoming more sustainable. Optimised use of technology rather than travel to undertake negotiations and due diligence, for example, will make deals both more sustainable and efficient.
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