Acquiring a New Business? Have You Checked the Health & Safety Risks?

Health and safety are not always at the top of the list of considerations when going through the business acquisition process, but there can be considerable implications for the acquiring organisation if these are not highlighted early in the process. It’s important to get these issues on the table sooner rather than later.

When you’re in the process of buying, or merging, with a business, you’re understandably more focused on the financial implications of what assets there are, and what the returns on those assets should provide. All very important, naturally. But in fact, health and safety are equally important considerations that should be considered much earlier in the process.

Often, health and safety issues are consigned to a small amount of due diligence towards the end of the process. And yet these often find health and safety issues that could mean substantial costs, that in turn could materially affect your decision to acquire. Even if the corrective action is small, the fact is that a thorough due diligence process could establish that it would not be a profitable acquisition.

Carry Out Due Diligence Early in the Acquisition Process

The acquisition decision-making process could affect the valuation of your transaction if certain environmental, health and safety issues are found, such as contaminated land, or an unacceptable safety record. The process could also be hampered if the business you’re purchasing is found to lack proper permits or registrations. It’s even been known for acquiring organisations to go bankrupt over certain severe liabilities, such as purchasing a company that manufactured products containing asbestos.

These are just some of many reasons why due diligence should be carried out early in the acquisition process, saving you time and money in the long run.

Ensuring Your Acquisition Deal Runs Smoothly

Quadriga fervently advises anyone going through the merger and acquisitions process that a key action to carry out before signing the deal is to fully review the situation beforehand. Doing this should establish:

  • Should we be acquiring the business at this price?
  • Are there any health and safety risks?
  • How easy will it be to correct those risks prior to acquisition?
  • Does the new acquisition have a poor health and safety reputation?

Ian Clements, Managing Director of Quadriga, talks about the importance of checking the health and safety aspects of business acquisitions here, saying, “In many cases, we advise organisations to delay the acquisition, or require the divesting organisation to take action prior to the acquisition.”

Occasionally, the cost of correcting any health and safety issues may be quite small. For instance, they might relate to some plant or equipment changes, or improving training. But it’s crucial to keep in mind that if something goes wrong during the period immediately post acquisition, it will be your organisation that faces all the liabilities associated with that. Whereas if you enter into an agreement with the divesting organisation to take those actions before the transaction goes through, you would be in a much better position.

If your organisation is looking to acquire or merge with another business, then Quadriga’s team of experts will help and advise you, offering guidance into all health and safety considerations. For more information, please contact us on 0118 929 9920 or click here to email us.

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