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How Does Green Impact Mergers and Acquisitions?

A new white paper by Deloitte examines how a company's environmental and sustainability activities can impact mergers and acquisitions.

Green continues to steadily seep into every nook and cranny of the business world, and a new white paper by Deloitte examines how a company's environmental and sustainability records and help or hurt mergers and acquisitions.

"How Green is the Deal? The Growing Role of Sustainability in M&A" gives examples of recent mergers and acquisitions in which green came into play.

Some companies might be willing to pay a premium for a company that already has a solid grasp on sustainable operations. Deloitte mentions that a grocery retailer recently paid extra in an acquisition because the target company had already integrated sustainability into its procurement, stores, distribution, community outreach and other functions. On the other end of the spectrum, an acquirer might offer less for a company seen as wasteful or environmentally-unfriendly.

"Acquiring companies will want to know whether they are taking on sustainability problems or opportunities," the white paper says. "Divesting organizations will want to know whether their sustainability profile will contribute to a premium or discount price.”

Current and possible regulation is one of the main factors driving environmental concerns into mergers and acquisitions, the paper explains. Along with knowing if an acquisition is going to be costly in terms of compliance, a company will want to know how the addition of another business will impact its carbon, water and other environmental footprints. If the acquirer goes through with the purchase, they will then have a starting point on where they can clean up operations.

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