Mergers and Acquisitions (M&A) are a part of today’s corporate growth strategy. As a part of M&A due diligence various critical business issues are evaluated. But what about safety performance of the company you are looking to acquire or merge with?
You will say that most M&A in oil and gas/chemical processing industries are asset-driven. You look at what the pots and pans can do for you in the future and base your M&A decision.
Remember as a part of M&A you are also acquiring the liabilities. You may recall liabilities incurred by Union Carbide after the Bhopal tragedy.
Past liabilities may be easier to identify; however, you may incur significant costs from a safety incident in the future that may affect your sustainability and profitability.
It is therefore only prudent to evaluate risk exposure prior to M&A, particularly if,
- Your organization has never been involved in chemical processing / oil and gas operations and you are looking to acquire a chemical processing operation
- You are looking to acquire pots and pans that utilize manufacturing processes and technologies significantly different than your current operations
In future posts, I will discuss what to look for as a part of safety due diligence prior to M&A.