The due diligence is a type of investigation that begins prior to the acquisition of a property or a company (industrial, Brownfield, business, etc.). Its purpose is to know precisely the quality and condition of the thing sold.
The due diligence study consists of carrying out not only a financial analysis of the company but also a legal analysis, i.e. examining the existing risks at the fiscal, social, environmental, etc. levels. In the sale of an industrial site or other industrial real estate, environmental hazards can be of crucial importance, often underestimated by both sellers and buyers.
I. Scope of environmental due diligence
The due diligence environmental constitutes a "photograph" says, at one point, the condition of the property being sold and its obligations vis-à-vis environmental regulations (related to waste, polluted sites and soils, water, asbestos, natural and technological risks, etc.).
The content of due diligence varies enormously depending on the nature of the industrial activities audited, the deadlines - often very short - allotted to carry it out, but also and above all the know-how and experience of the person carrying out the assessment.
However, there is a consensus among industry professionals on the methodology to be followed to perform environmental due diligence.
Thus, assessments like SEPP 55 Contamination Assessment, Preliminary Site Investigation, and Detailed Site Investigation begin with the analysis of all the available information made available by the company either physically or through a “virtual data room” (administrative authorizations, easements, historical studies, soil and water analyzes, latent or ongoing litigation, etc.).
The assessment then consists of determining the applicable texts and identifying any non-compliance with the regulations in force. This analytical work makes it possible in particular to:
- Know precisely the environmental obligations weighing on the company/the industrial site;
- Identify existing environmental problems (soil and/or water pollution; presence of asbestos; lack of administrative authorizations; existence of easements; litigation(s); etc.
- Determine the scope and quantify the cost of compliance;
- Evaluate precisely the environmental responsibilities incurred;
- Anticipate the application of future environmental standards.
II. Usefulness of environmental due diligence
The due diligence Environmental allows the purchaser to know precisely the risks it is exposed by the acquisition of the property. This gives it a decisive advantage in price negotiation and allows it to anticipate future environmental and health legislation.
In environmental matters, legislation is evolving rapidly. It is therefore important to be alerted to upcoming regulatory trends.
For the seller, environmental due diligence ensures optimal information vis-à-vis the purchaser and avoids any liability claims for defective consent.
The Preliminary Site Investigation report also gives the seller the opportunity to have a better knowledge of the state of the land and/or industrial facilities and, consequently, allows him to better assess the value of his property and of the guarantees - in particular environmental liability - which it can give to the purchaser.
The due diligence Environmental and offers both parties a number of advantages that make it a must before any acquisition of property or businesses.