Deloitte: Mergers, Acquisitions Reflect Growing Role of Sustainability
November 12, 2008 // Published as a news service by IHS
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Mergers, acquisitions and divestitures have been largely unaffected by the green trend.
According to Deloitte & Touche Tohmatsu, however, recent deals in industries ranging from energy to retailing have demonstrated that sustainability can affect both the viability and the ultimate value of deals.
Companies are seeking to gain support for acquisitions by committing to actions that will help address issues that affect the environment.
Others are willing to pay a premium earnings multiple for companies because of their sustainability leadership.
"In today's economic and regulatory environment, companies that have strong corporate responsibility and sustainability programs in place will likely be rewarded for their ability to manage the risks and opportunities associated with corporate responsibility and sustainability," said Rod Millott, partner with Deloitte's Mergers & Acquisitions Transaction Services.
"Those that do not have such programs in place can expect to face increasing regulatory and marketplace demands for change. It is clear that greater consideration of sustainability-related issues when evaluating potential M&A transactions will help improve the likelihood of the success of the deal."
Kathryn Pavlovsky, a principal with Deloitte Financial Advisory Services and a leader of Deloitte's Enterprise Sustainability group, noted that acquiring companies will want to know if they are taking on sustainability risks or opportunities. "Divesting organizations will want to know whether their sustainability profile will contribute to a premium or discount price," said Pavlovsky.
Source: Deloitte Touche Tohmatsu (DTT).