Considerations When Selling to a Financial Buyer

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).

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.

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?

Business owners pour themselves into running their companies; sacrificing time, investing capital and putting their blood, sweat and tears into a business they can be proud of.

Even with a carefully thought out business strategy and development plan, a lot of entrepreneurs neglect the final chapter of their story: the exit strategy.

With the COVID-19 outbreak comes unprecedented business and economic disruption and uncertainty. The highest priority for your businesses during this crisis is its long-term sustainability, and the best way to ensure that is to make it through the short-term. Here are eight key questions you should ask yourself and our thoughts to help you evaluate your business and options amid the COVID-19 crisis.