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Introduction to ESG in M&A

2 Part Course  |  Learn how environmental, social and governance factors can impact the M&A process from deal sourcing through to transaction closing

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A one-day course presented over two-half days in a virtual class from 9:30am to 1:00pm UK time

Part 1

Impact of ESG on value and growth

  • How environmental, social and governance issues can be material across the M&A process
  • Overview of ESG issues
    • S: Labour rights, human rights, access to basic needs
    • E: climate, biodiversity, circular economy
    • G: board oversight, remuneration, corruption, tax
  • Rising regulation
    • drive to net zero
    • labour and safety laws post Covid
  • Government incentives for sustainable economic activities
  • Changing consumer behaviour
    • Social media
    • Boycotts
  • Reputation and greenwashing
  • Rise of sustainable capital
    • Commitments to net zero
    • ESG risk appetite
  • Opportunities: identifying opportunities for growth, enhance reputation, ease access to finance and talent acquisition
  • Case studies: Financial impact of recent ESG-related controversies on public and private businesses, including those considered “ESG companies”

ESG and M&A rationale

  • ESG and defining an M&A strategy
    • Identifying how ESG fits with the rationale of the transaction
      • Unlocking synergies with ESG
        • Cost synergies
        • Revenue synergies
      • Unlocking growth with ESG
        • Inorganic growth in ESG domains: buying volume and/or capability
      • Increasing M&A market power in ESG-relevant domains
      • ESG-themed diversification
    • Determining whether and how sustainable finance structures for the acquisition
    • Determining how ESG considerations will fit in the target operating model
  • ESG and setting up M&A search criteria and target lists
    • ESG risk management in due diligence
    • ESG impact as a strategic factor for candidate selection, to assess the extent to which the target is an “ESG business”
  • ESG and definition of target lists
  • Case study: M&A rationales in the renewable energy market

ESG and different types of M&A transactions

  • Horizontal mergers & acquisitions
    • How to identify relevant industry-specific ESG characteristics for horizontal mergers
    • Due diligence of ESG policies, procedures, and performance between horizontally merging companies, i.e. operating in similar industries that may or may not be competitors
    • Assessing ESG performance between companies in a horizontal merger
    • Choosing an ESG target operating model for the horizontally merged company
  • Vertical mergers & acquisitions
    • How to identify supply chain ESG performance
    • Due diligence of ESG policies, procedures, and performance between vertically merging companies, i.e. companies that are suppliers and customers in the same supply chain
    • Assessing ESG performance of suppliers/ supply chains targeted for vertical M&A integration strategy
    • Choosing an ESG target operating model for the vertically merged company
  • Conglomerate mergers & acquisitions
    • Due diligence of ESG policies, procedures, and performance between companies merging into a conglomerate, i.e. companies that are unrelated industries
    • How to identify relevant industry-specific ESG characteristics for conglomerate mergers
  • Case study: Impact of supply chain sustainability on company valuation in agricultural supply chains
  • Group Exercise: M&A strategy formulation 

Part 2

ESG factors relevant to valuation

  • Identifying what is financially material at an asset/company level
  • ESG impacts & transmission channels
  • Climate risk
    • Physical: acute and chronic
    • Transition: regulation, changing consumer behaviour and technological change
    • Litigation
  • Frameworks to adjust revenue, opex, cost, capex and required rate of return, as well as multiples, based on ESG issues that are financially material
  • Data
    • Company reports: ISSB, TCFD
    • ESG databanks
    • ESG rating agencies

Integrating ESG in valuation models

  • Application to Discounted Cashflow Analysis
    • How to identify possible ESG impact on future cashflows
  • Application to Comparable Company Analysis
    • How to embed ESG factors in an analysis of relative valuation metrics for public companies (e.g ESG valuation)
  • Application to Comparable Transaction Analysis
    • How to embed ESG factors in an analysis of past transactions
  • Case study: Impact of climate physical (PG&E) transition, as well as ESG risk factors, in NPV in utilities

Merger agreements

  • ESG-linked deal terms
    • ESG warranty
    • ESG indemnities

Post-merger integration

  • Implications of combining organizations with very different stages of integrating sustainability:
    • Structural
    • Cultural
    • Social
    • ESG reporting and KPIs for M&A deals financed with sustainable finance structures

Group Exercise: M&A team simulation

Please Note – It is strongly recommended that both parts of the course are attended.
Due to the content of the course - Part 2 is not suitable to attend without having attended Part 1.

Our ESG in M&A course trainer has a comprehensive financial services background in capital markets and as an originator. In a career spanning more than thirty years, she has built a consistent record in developing new business lines ab initio in several markets, notably liability management and, in the past ten years, sustainable capital markets.

She oversaw BNP Paribas’ fast-growing sustainable bond franchise for four years, before being promoted to a more strategic role advising the bank’s key issuing and clients on sustainable finance, including financial products in the M&A process. Before that, she was head of liability management, and previously, Head of Corporate EMTN at Deutsche Bank UK.

Since leaving the industry in 2019, the trainer has continued to work in the field of sustainable finance, with a range of roles including working with the Green Finance Institute, Impact Investing Institute and the Grantham Research Institute at the London School of Economics and Political Sciences. She also worked for a German-based fund, assisting them on how to optimise the due diligence process in the absence of equity ownership.

Our ESG in M&A course trainer has a strong interest in education, and throughout her career, has been involved in providing training and mentoring in a professional capacity. Most recently, she played a key role in capacity building around awareness of sustainability risks and opportunities for colleagues and clients at BNP Paribas.  She was instrumental in delivering well-regarded sustainable finance training around the world on behalf of ICMA and IFC.  She is a member, and the former chair, of the British Standards Institution’s committee of experts in sustainable finance. In 2016, she completed the Post-Graduate Certificate in Sustainable Business at the Cambridge Institute for Sustainability Leadership.

  • Deep dive into how environmental, social and governance factors can impact the M&A process from deal sourcing through transaction closing.
  • Explore the wide-ranging impacts of ESG risk.
  • Help participants understand how ESG risks transmit into financially-material impacts.
  • Demonstrate how ESG can be integrated into financial models, considering both risks and opportunities.
  • Inform participants about the evolving regulatory landscape, and reporting initiatives that provide sources of ESG-related data.
  • Explain the impact of ESG in deal documentation.
  • Explore the challenges of post-merger integration.

  • Deep understanding of the M&A landscape and its intersection with environmental, social and governance risks.
  • Focus on the financial materiality that sustainability risks have on deal sourcing, valuation and reputational risk.
  • Insight into practical aspects of designing and adapting risk frameworks to climate-related risks.
  • A thorough review of related academic research and its implications.
  • Perspective based on international experience in ESG.
  • Practical insights on sustainability risk regulations and the implications for implementation by banks.

Our ESG in M&A training is intended for those who have experience in corporate finance, capital markets, investment management or ESG investment. It is recommended that participants have prior knowledge of topics such as risk and return and asset valuation.

Particularly relevant roles include:

  • Senior executives who set the strategic course for growth and oversee the firm’s investment portfolio, including ESG aspects: CFO, COO, CRO, and founder.
  • Mid-level managers who serve in finance or investment functions and play a key role in the financial matters of the organisation: financial analyst, investment manager and acquisition manager.
  • Consultants, Legal Counsel, and Advisors who serve in a role in M&A transactions: M&A investment banker, attorney.

In a post-pandemic world with increasing commitments to transition to a low-carbon economy, M&A offers a myriad of opportunities, but it also brings threats to those on the receiving end of a takeover. Growth of regulation is exponential, consumers are increasingly scrutinising and reacting to controversies, employees are more openly suing companies and the physical impact of climate change is hitting all sectors.

It is imperative you understand how ESG issues can change the fundamentals of the deal, or at the very least, call for considerations in the transaction documents. Our ESG in M&A course will cover in more detail how ESG can be integrated into valuation models, and where to obtain data to enable quantification.

Number of places:
Part 1

£ 795.00

Number of places:
Part 2

£ 795.00

Discounts available:
Virtual Class

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