Environmental change and sustainability in M&A: the new acquisition of choice

Published in Insights by Emma Curtis on 1 May 2022

Climate change has become a hot topic (sorry) in recent years, and will continue to be the defining focus going forwards. World governments are instigating green agendas, and businesses are working towards sustainability targets, such as a transition to net zero emissions by 2050. This changing landscape is affecting both the political and M&A worlds.

SMEs crying out for guidance

According to Business Leader, in a recent survey of 500 UK SMEs, 91% feel that it is important to be sustainable, but struggle due to lack of guidance, efficient carbon footprint data and time. You can read the full article here. It seems SMEs have been crying out for clarity on this issue, citing pressure from younger employees as one of the reasons for the push towards change.

Climate change predictions

In the near future, businesses will face a range of problems related to climate change. In 2019, the International Labour Oganization stated that by 2030, 80 million jobs will be at risk if the rising temperature predictions are realised. You can read the full article here. Temperature rises of 1.5c will cause a loss of working hours due to heat stress. And some of the sectors likely to be most affected include agriculture, refuse collection, tourism and some industrial work.

New opportunities in M&A

Although these reports and predictions are, quite frankly, worrying, they have opened up new opportunities in the M&A sector. Here at Kingsbrook we are seeing a rise in interest in sustainability consultancies. In June 2022, we advised in the sale of ClearLead; an energy, carbon and sustainability consultancy. Two large companies dominated the bidding process. Deal advisor Luke Rebbettes states this was due “to the growing demand for renewable and sustainable energy consultancy.”

In fact, ESG (environmental, social and corporate governance) companies are becoming front and centre in acquisitions. The PWC’s sustainable finance series states that ESG and sustainable finance will become a matter of survival to meet the needs of sustainability-conscious investors, regulatory requirements and the expectations of the society at large. Private markets are increasingly being required to identify, manage and disclose exposure to ESG risks by EU regulators. This has resulted in private market investments into ESG almost doubling between 2017 and 2020.

If you are the owner of a company operating in the sustainability sector, the growth opportunities are becoming increasingly substantial. You could be extremely valuable to an acquirer. Is now the time to explore selling or raising investment in growing your company? Our advisors would be happy to talk though your options.

 

If you are thinking of selling your business and would like to explore your options with Kingsbrook, please get in touch, either by email at [email protected] or call us at 01635 736741.

Published on 1 May 2022 by

Emma Curtis

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