Selling or taking over a business is not something you do lightly. It requires an intensive period of preparation. And especially now, when the world of business acquisitions and sales is changing dramatically. With the emergence of ESG factors - environmental, social responsibility, and good corporate governance - as core criteria, the process has become more complex. But it also offers more opportunities! At M&A FIRM, we understand these dynamics, and we ensure that you, the entrepreneur, are fully prepared for this new reality.
Crucial: preparation time
Thorough preparation is critical to success. In M&A/FIRM, this is the PREPARE phase and ideally we begin this two years before the planned business acquisition or sale. This is a phase we pay close attention to. We dive deep into the soul of your company, looking beyond the numbers, to determine its true value. After all, that true value is more, much more, than the sum of your operating income and free cash flow. In this PREPARE phase, we identify together the ESG factors where improvement is needed, so that your company not only thrives now, but also in the future.
ESG is indispensable in your business valuation
In today's era, a company's value is increasingly determined by its performance on sustainability in the supply chain and respect for the environment and human and animal welfare, ESG performance. But how do you determine how ESG-proof a company is? Is your companyf where it comes to ESG perhaps unknowingly leaving gaps? You will notice this not only commercially, but also when you sell your company. The value of your company will fall if you do not perform well, so the purchase price will be considerably lower. After all, the new owner faces substantial investments after the purchase if you underperform. Think of insulation of the business premises, finding new, more sustainable suppliers or raw materials, or, for example, straightening out a skewed remuneration policy. Poor performance on ESG criteria can thus lead to lower company value and reduced attractiveness to buyers. Therefore, whether you are a buyer or seller, it is essential to have a deep understanding of your own company's ESG performance. In the PREPARE phase, we will research your company's ESG scores together (the baseline measurement) and determine where we will improve them. Examples include tightening agreements with your suppliers with regard to improving their ESG performance, implementing a human rights codex within your company, setting up a monitoring and reporting system and introducing quality audits. Additional benefit? You become more attractive as a supplier to high-quality customers.
Understanding and leveraging data
Together, we ensure that the right information is available and that everyone in the organization recognizes the importance of treating each other respectfully and sourcing ethically. This is essential for creating a corporate culture that embraces ESG values. Because you can show such beautiful numbers, if this is not supported in an organization, if your employees do not understand why they should pay attention to this and report on it, it remains a wash. We are going to create awareness (insofar as it is not already there, of course), we are going to ensure that the right questions are asked and the right actions are taken.
The next phase: MERGE
In the next phase, the MERGE phase, we start looking for a suitable buyer or seller for you. This is the most intensive part of the whole process and goes from looking for the perfect candidate to closing the deal. Believe it or not: we are not looking for the quick win here. Anything but that, in fact. Our goal is to find a match that is not only financially attractive, but can also develop your business in a sustainable way. We will perform ESG due diligence at this stage in addition to the required legal due diligence. This applies both when we act for a buyer, as well as for a seller. In an ESG due diligence, we gain insight into the ESG performance of both parties. There is already a lot of legislation and even more is in development (think of the ESD3 directive [LINK TO ARTICLE ON LAWFIRM WEBSITE]), so testing compliance is one of them. But also generally, we want to have a good picture of the state of play, so that we can assess what challenges await in the future. So we look at the ESG performance and whether the potential candidate might be facing ESG risks so that you can take into account the possible legal and financial consequences in your decision making.
Our multidisciplinary approach means you get all the advice you need from one source. As a result, the process runs smoothly and your daily business operations are less disrupted. As an entrepreneur during this intensive MERGE process, you can simply do what you do best: run your business. We take care of the rest.
The importance of ESG reports
ESG reports are no longer a "nice to have"; they are an essential part of modern business operations. They provide valuable insights for investors, stakeholders and customers on how your company is performing in terms of sustainability and social responsibility. These reports not only improve your company's reputation, but also make it more attractive for future investment. During the PREPARE phase, we already prepare an ESG report for your company. This report will be updated and modified throughout the process.
Why choose M&A/FIRM?
We can cite several reasons for this. But the most important ones are:
- We have in-depth knowledge of ESG factors and how to integrate them into the business acquisition or sale process.
- Our approach is holistic and customized, focused on the long-term success of your business.
- We offer all the necessary advice from a single source, making the process as efficient and effective as possible for you.
Investing in a sustainable future is not only good for the planet, it's also a smart business decision. Let M&A FIRM guide you through this crucial process so that your business not only thrives today, but also tomorrow. With us, you are not alone; together we will build a sustainable future for your business.
Want to know more?
Want to learn more about this topic? Or would you like to hear more about what M&A/FIRM can do for you on ESG? Feel free to contact Esther Tromp (E: esthtertromp@manda-firm.international , T: +31655741267).
