Buyer Beware: Assessing Stewardship Efforts in Light of M&A
Compliance is the lens through which many product stewards view their profession. But Wayne Bergin, principal consultant at ERM, looks at it through a different lens shaped by his work as a product steward in ERM’s transaction services team providing advice to clients on product and chemical compliance issues in the context of mergers and acquisitions (M&A). “A merger or acquisition of a company is predicated on sales of products, and if sales become invalid for some reason, then that’s a problem,” he says. In other words, gaps in product stewardship can ruin a business transaction.
While due diligence standards for evaluating financial or EHS functions are well established, the processes and procedures for evaluating product stewardship compliance are still emerging. At Stewardship 2016, Bergin will share insights from his experience during the presentation Best Practices for Product & Chemical Compliance Due Diligence in Mergers & Acquisition.
One consideration is the opportunity cost of the transaction. ““The ability to sell product is so important to the underlying cash flow and the value of the deal,” he says.
That’s where product stewardship diligence comes in. Often the purpose of M&A is to get access to new products or to new markets, says Bergin. Yet when companies conduct diligence before a transaction, all too often they fail to fully consider product stewardship efforts (or lack of them) in their valuations. “If a company wants to do a deal to acquire company X because they sell 10 chemicals in countries worldwide, making sure they’re legally allowed to sell those products and to plan for those actions required to allow ongoing sales on day one of the operation of the new company is critical,” says Bergin.
With case studies and vignettes, Bergin will leave attendees with a better idea of how to assess product stewardship during diligence or put their company in the best light for potential buyers. It’s knowledge that Bergin thinks will only become more important over time. “I think product stewardship assessments will become more and more important as a part of diligence of mergers and acquisitions,” he says.