Transaction Environmental Liability: A Map for Safe Passage
Change is inevitable, especially in the current Canadian forest products industry. Consolidation, closure, acquisition, mergers – it’s all happening. Yet there remains one constant –the need to clearly understand and monetize environmental liability, an increasingly important issue on the corporate governance agenda. Strategically, environmental reviews help identify often subtle issues that can explode into crippling remediation expenses or extensive delays which in turn can significantly devalue an investment.
Working on behalf of lawyers, engineers and merger/ acquisition (M&A) specialists for over 20 years, Envirochem Services Inc. (Envirochem) has developed a technically and financially sound model to qualify and quantify environmental risk. It begins with deploying a highly experienced team specializing in forest products manufacturing and environmental auditing to articulate all issues from site contamination and compliance status to the need for potentially costly pollution control device upgrades. Each issue is then assigned a probability (high, medium or low), a time horizon for expenditure (e.g., from imminent to within five years) and anticipated cost. Rapid data collection, processing and reporting is supported by Envirochem’s signature software called “eDICTS” (electronic data information compliance tracking system) to generate information that prospective buyers can easily and quickly “plug” into their valuation process.
In essence, the environmental review process must “translate” technical risk into financial risk. It must provide an accurate feasibility of the new business venture for upcoming environmental costs and priorities. Compared to the overall value of the asset in question, the cost of an environmental due diligence audit is nominal with potentially enormous strategic implications.
Envirochem Services Inc, of Toronto and Vancouver – a forest industry partner for over 20 years, guiding our clients to win awards from the United Nations, NAOSH and A&WMA. Call us at:
(604) 986-02333 or (416) 763-5567.
