Is Your M & A Due Diligent Analysis Really that Diligent?

Due to employers’ understandable aversion to paying legal fees, they often wait until something goes wrong to avail themselves of counsel. That’s regrettable because guys like me with over 30 years of specialized experience prefer to assist clients in avoiding problems and using human capital to succeed. Despite the huge sums paid to lawyers in M& A transactions, many due diligence efforts are rote and ineffective with regard to labor, employment, and especially safety concerns. There are recognizable standards and guides to environmental due diligence but safety due diligence efforts seem to flummox even solid law firms and consultants.

The safety due diligence efforts focus on injury and illness data, OSHA citation history and EMR or other workers comp numbers. These are lagging indicators and tell you almost nothing about the compliance and safety culture of the target company. Even worse, focus on these items and supposed benchmarking with other companies can distract the purchaser from the real meat. Not only may the purchaser miss costly items, they hinder the crucial post purchase integration efforts.

So it was with pleasure that I agreed to participate in Environmental Resource Management’s (ERM) balanced seminar at Georgia Tech next Tuesday (March 31) to discuss the safety issues along with ERM’s professionals’ explanation of environmental issues.

Information on this timely session can be found at ERM’s site.

Topics include:

  • Hidden Risks – Understanding ESG (environmental social and governance) matters as part of an acquisition.
  • Safety Due Diligence – Know what systems, culture, and risks you are acquiring. How to develop the right scope to strike a balance.
  • ASTM Phase I ESA Data versus Early Diligence and Critical Analysis of Possible Risks and Liabilities – How to gather the right data so that leadership can make good decisions in a timely manner.
  • Post Merger Integration – Addressing identified EHS risks and making the most of the EHS opportunities following a merger or acquisition.

If you do a proper due diligence into not just safety programs, but also into culture, history, and integration, you’ll not only gain a better picture of the costs ahead, but lay the foundation for later integration efforts. Many integration efforts are haphazard and driven only by efforts to achieve cost savings. Is that really how you want to integrate acquired companies? What happened to using the best of both companies? Is safety just one more item to check off or due to want to incorporate it into Lean manufacturing efforts and as a way to assimilate and engage employees?

I’ll write more on this topic in the future, but in the interim, attend the conference if opportunity presents.


About mavity2012

I am a Senior Partner operating out of the Atlanta office of Fisher & Phillips LLP, one of the Nation’s oldest and largest management employment and labor firms. My practice is national and keeps me on the road or in one of our 28 offices about 50 percent of the time. I created and co-chair the Firm's Workplace Safety and Catastrophe Management Practice Group. I have almost 29 years of experience as a labor lawyer, but rely even more heavily on the experience I gained in working in my family's various businesses, and through dealing with practical client issues. Employers tell me that they seldom meet an attorney who delivers on his promise to provide practical guidance and to be a business partner. As a result, some executives probably use different terms than “practical” to describe my fellow travelers in the profession. I don't enjoy the luxury of being impractical because I spend much of my time on shop floors and construction sites dealing with safety, union and related issues which are driven by real world processes and the need to protect and get the most out of one's most important business assets ... its employees. That's one of the reasons that I view safety compliance as a way to also manage problem employees, reduce litigation and develop the type of work environment that makes unions unnecessary. Starting out dealing with union-management challenges and a stint in the NLRB have better equipped me to see the interrelationship of legal and workplace factors. I am proud also of my experience at Fisher & Phillips, where providing “practical advice” is second only to legal excellence among the Firm’s values. Our website lists me as having provided counsel for over 225 occasions of union activity, guided unionized companies, and as having managed approximately 450 OSHA fatality cases in construction and general industry, ranging from dust explosions to building collapses, in virtually every state. I have coordinated complex inspections involving multi-employer sites, corporate-wide compliance, and issues involving criminal referral. As a full labor lawyer, I oversee audits of corporate labor, HR, and safety compliance. I have responded to virtually every type of day-to-day workplace inquiry, and have handled cases before the EEOC, OFCCP, NLRB, and numerous other state and federal agencies. At F & P, all of us seek to spot issues and then rely upon attorneys in the Firm who concentrate on those areas. No tunnel vision. I teach or speak around 50 times per year to business associations, bar and professional groups, and to individual businesses. I serve on safety committees at three states’ AGC Chapters, teach at the AGC ASMTC
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