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ESG in M&A

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

Modelling for Divestitures Training Course

A one-day course presented in two half-day live webinars

This program is intended for those who have experience in corporate finance, capital markets, or investment management. 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: CFO, COO, CRO, founder
  • Mid-level managers who serve in finance or investment functions and play a key role in the financial matters of the organization: financial analyst, investment manager, acquisition manager
  • Consultants, Legal Counsel, and Advisors who serve in a role in M&A transactions: investment banker, attorney

  • 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 an, 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

  • 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 both risks and opportunities
  • Inform participants about the evolving regulatory landscape, reporting initiatives that provide sources of ESG-related data
  • Explain the impact of ESG in deal documentation
  • Explore the challenges of post-merger integration

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 companies

ESG and M&A rationale

  • ESG and defining a 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 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 in due diligence
    • ESG impact as a strategic factor for candidate selection
  • 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 integration
    • 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
  • 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 (gas in Europe) risk in NPV in utilities

Merger agreements

  • ESG-linked deal terms
    • ESG warranties
    • 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

The trainer offers a wealth of investment banking and training experience and delivers training courses that cover a broad range of front office topics.

After graduating from Cambridge with a degree in History, he started his banking career in corporate finance with County Bank in London in the early-1980s before moving to Tokyo for County to help build its securities and investment banking business in Japan. He spent nine years in Japan working in corporate finance, debt capital markets and structured products and, finally, equity derivatives trading. He was a member of the Japan management committee and headed a twenty-person team running trading books in convertibles, warrants, futures and options and the firm’s sizeable index arb and basket trading business.

In the mid-90s he moved to Hong Kong and joined HSBC to build up its north-east Asia equity capital markets business, working on origination of equity and convertibles transactions in Taiwan and Korea. After the 1997 Asian crisis he was promoted to MD and asked by HSBC to head its Regional Corporate Finance & Advisory business, running a business with over 50 professionals working from Taiwan to India.

The trainer was headhunted by SocGen and asked to move to London in 2000 where he was appointed Co-Head of SG Securities London ECM business, with a specific focus on building the bank’s convertibles practice outside the French markets. By 2002 SG won the prestigious IFR Convertibles Bank of the Year award on the back of its successful growth in non-French business. The trainer was then approached by ING Barings and recruited to be Global Head of Equity-Linked Origination for the firm. In his first year in the role, revenues from new issue convertibles increased 500%.

He today provides advisory and training services to financial institutions across the globe.

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 increasing scrutinizing and reacting to controversies, employees are more openly suing companies and the physical impact of  climate change is hitting all sectors. Understand how ESG issues can change the fundamentals of the deal, or at the very least, call for considerations in the transaction documents. The course will also 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
Number of places:
Part 2

£895.00

Per participant per part

Discounts available:

Book multiple places on both parts in one order for the below discounts:

  • 2+ places at 40% less = £1074.00
    per person
  • 4+ places at 50% less = £895.00
    per person
  • 6+ places at 60% less = £716.00
    per person
  • 9+ places at 70% less = £537.00
    per person
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