ESG now top consideration for M&A

A survey by Grant Thornton of M&A professionals has found that ESG considerations are now key among dealmakers.

With 68% of respondents saying they expect deal volume to continue to rise over the next six months, the survey of 156 dealmakers found that 97% said a target’s ESG program and reporting capabilities are important considerations in any deal.

Elliot Findlay, Grant Thornton’s national managing principal of M&A said, “Given the workforce issues confronting a lot of employers right now, how well a company treats its people can make a critical difference for a buyer. Most buyers don’t have a formal ESG due diligence process in place, but companies are moving in that direction.”

Carlos Ferreira, Grant Thornton’s national managing partner of Private Equity, says that private equity firms have a major role to play when it comes to ESG.

“Large private equity firms know their targets won’t have very mature ESG programs compared to larger organizations,” says Ferreira. “But those firms can help their targets create effective ESG programs in a way that private companies cannot.”

Meanwhile, Grant Thornton leaders say the focus on ESG makes it more critical than ever to demystify what can be a complex space.

“Companies are getting feedback from a lot of constituencies — their employees, customers, investors, even the public,” notes Jim Burton, a partner and leader of Grant Thornton’s ESG and Sustainability services. “It’s important to remember you don’t have to address everything at once. Rather, an incremental approach to ESG will better position your organization for the long run. Do an assessment, find out what matters most to your key constituencies, and make sure you have the information and tools in place to set goals and measure against those metrics.”