A private equity firm sought to acquire a marine equipment manufacturer in South America and needed to identify material environmental, social or governance (ESG) risks that might affect the deal. On behalf of the prospective buyer, KPMG in Brazil carried out due diligence that included inspections of the group’s sites and facilities, interviews with senior managers, and a review of management systems, policies, procedures and reports.
KPMG discovered that the acquisition target had failed to secure a number of mandatory environmental licenses and permits, putting it at potential risk of financial penalties, factory closures and criminal prosecution of its executives. With the support of KPMG, the client successfully negotiated a reduction in the deal price and addressed the risks in the transaction.
Tomas Otterström, KPMG in Finland and KPMG in Sweden.