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Regardless of the controversy surrounding ESG, as a framework, it remains important in the public markets and in M&A. Investors continue to want the material ESG aspects of an investment to be evaluated.

Research has shown that as many as 70-80 percent of all mergers fail to meet their original business and financial goals, which is why understanding culture and leadership between organizations during the sale process is so important (and where stakeholder-value is created or destroyed).

Welcome to our Q1 2024 report. As an organization committed to Environmental, Social, and Governance (ESG) principles, we extend our gratitude to both our continuing client relationships and our new clients. Your dedication to conducting business with a conscience is the cornerstone of our mutual success. We remain dedicated to supporting responsible businesses - helping them create enterprise value while protecting their purpose, mission, and core values – through capital raising, ownership transition, and/or strategic acquisitions. Those who share our vision of responsible and conscious business and those who are interested in doing the right things for all stakeholders continue to inspire us and the work we do.  

Communication with stakeholders is critical when selling a business.

The emergence of Purpose Trusts presents a transformative opportunity for companies to align their values and purpose with their ownership structure and preserve the company’s mission post-sale.

As Environmental, Social, and Governance (ESG) factors have gained traction in the world of finance, one area where ESG is increasingly being incorporated into the process is in mergers and acquisitions (M&A). ESG can create value and mitigate risk in M&A transactions, benefitting it brings both acquirers and target companies.

Whether founders and owners are looking for strategic partners, financial partners, selling or recapitalizing their business, using a purpose-driven lens to identify values-aligned investors is in both parties' best interest. Once identified and agreed upon, these interests can be included in the transaction structure or legal documents such as term sheets, LOIs, conscious contracts, and transaction documents.

ESG can play an influential role in the due diligence process of M&A transactions. ESG due diligence can help buyers identify ESG-related risks which may impact the overall deal structure and valuation. Working with advisors prior to going to market enables sellers to ensure that they have appropriate regulatory licenses and permits to minimize the risk that a potential buyer’s diligence would result in a decreased purchase price.

After ESG factors are reviewed during the due diligence process and evaluated when negotiating certain aspects of the deal, there are a few different ways to ensure ESG success in M&A transactions after both parties sign on the dotted line.

In a major development in the public markets, the Securities Exchange Commission Asset Management Advisory Committee issued a preliminary recommendation that the commission require the adoption of standards by which corporate issuers disclose ESG material risk. The EU has already passed a corporate sustainability reporting directive, which takes effect in 2023.

Environmental, social and governance (ESG) principles have an increasingly prevalent impact on the negotiation of M&A transactions. To successfully negotiate an ESG M&A transaction, document the relevant ESG findings and provide an analysis of potential legal risks and exposure associated with any related issues.

EPOCH Pi’s quarterly update on the latest insights on impact companies, venture capital valuations, U.S. private equity deals and more. In the second quarter of 2021 business transactions and trends shows continued recovery as institutional investors moved away from conservative decision-making they adopted in 2020 and increased their alternative asset allocations.

Investors are becoming more and more concerned with ESG metrics that can protect and maximize value and are considering the impact of such matters in their screening process, transaction risk mitigation, due diligence and other strategic decision-making.

The first quarter of 2021 has seen the continuation of general business trends brought about by the COVID-19 pandemic. We've pulled together the following insights on how conscious companies — enterprises who seek to make an impact beyond profit on environmental, social or governance (ESG) issues — have performed in Q1 2021.

Joe Biden has been a supporter of Impact and ESG investing having championed these initiatives in the Obama Whitehouse. What emerged as a nascent trend in the 2008-2010 downturn has blossomed over the ensuing years and is sure to be catapulted to new heights by the Biden Administration that comes to office amidst growing awareness that people want a more inclusive economy with more equitable access to opportunities.

While we’re proud to be part of the B Corp movement, our mission and values have always been our north star; getting a certified helped to add a level of formality by allowing us, our clients and our peers to measure that commitment. Now, more than ever, it’s important to strengthen that commitment and to uphold the standards that we set for ourselves in order to support and better our communities as we work through crises and societal forces changing our vision of how business should operate.

While M&A tactics are an attractive option for companies big and small, merging two entities is harder than it looks. And when deals don’t live up to expectations, misalignment of company culture is usually to blame. Company culture is effective and sustainable when it produces results that exemplifies a healthy and productive workplace. But unlike calculating a company’s performance how does one measure culture?