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ESG Due Diligence impacting sale of your business

When reading this article in ESG Today, I was not surprised at all to read that a recent survey by KPMG noted the impacts of ESG due diligence on M&A deals. The stats below speak for themselves when you see how serious this due diligence is now taken, but also how it negatively impacts the result in whether the deal goes ahead. 

More than half of respondents indicated that red flags on ESG could be a deal stopper or result in additional closing conditions, and 44% saying it could result in a valuation reduction. 53% of respondents said that material ESG due diligence findings have resulted in deal cancellations, and 42% said that they have resulted in purchase price reductions.

It also highlighted the lack of available information to conduct such due diligence. Now we know this is about to change soon, with implications like the CSRD reporting. And many think it can't come quick enough. 

One thing is for certain, there is now no escaping what you do on Sustainability! 

The survey found that three quarters (74%) of professionals are already integrating ESG considerations as part of their M&A agenda, with the identification of ESG risks and opportunities given as the top reason for conducting ESG due diligence, by 46% of respondents, followed by requirements by investors, cited by 19%, and preparation for regulatory requirements by 14%.


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