Environmental Due Diligence Checklist

Don't overlook the importance of a detailed investigation of environmental factors during due diligence. By following this checklist, you will have a much better understanding of what issues may be hiding under the surface.

Environmental Assessment as One of the Most Important Due Diligence Factors

A common error among those beginning the process of purchasing a company or commercial real estate is overlooking the importance of doing a detailed investigation of the environmental factors that can significantly reduce the value of the targeted after the acquisition.

By following the Environmental Due Diligence checklist, you will have a much better insight into possible hidden issues and, consequently, you will be able to avoid future complications. More specifically, some of the most important benefits of this checklist are:

  • Becoming aware of potential environmental risks that could occur
  • Identifying whether or not the facility is facing environmental contamination charges
  • Learning of unfinished paperwork (which can cause a lot of problems, so it is best to identify unfinished paperwork early on)
  • Determining the history of the property and making sure all records are uncovered 

Main Environmental Matters

Before discussing any actions and plans about the acquisition or inspection of the environment, there are few crucial steps to take, such as:

  • Obtaining a copy of all written environmental reports for the last 5 years 
  • Acquiring notices, related to the company’s work, from environmental authorities 
  • Securing all environmental permits under which facilities owned by the company operate
  • Identifying locations of potentially hazardous waste on the company site
  • Compiling a documented history of on-site spillage or leakage
  • Securing and organizing documentation about future expenditures for environmental programs related to operations of the company 
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Environmental Assessment as One of the Most Important Due Diligence Factors

A common error among those beginning the process of purchasing a company or commercial real estate is overlooking the importance of doing a detailed investigation of the environmental factors that can significantly reduce the value of the targeted after the acquisition.

By following the Environmental Due Diligence checklist, you will have a much better insight into possible hidden issues and, consequently, you will be able to avoid future complications. More specifically, some of the most important benefits of this checklist are:

  • Becoming aware of potential environmental risks that could occur
  • Identifying whether or not the facility is facing environmental contamination charges
  • Learning of unfinished paperwork (which can cause a lot of problems, so it is best to identify unfinished paperwork early on)
  • Determining the history of the property and making sure all records are uncovered 

Main Environmental Matters

Before discussing any actions and plans about the acquisition or inspection of the environment, there are few crucial steps to take, such as:

  • Obtaining a copy of all written environmental reports for the last 5 years 
  • Acquiring notices, related to the company’s work, from environmental authorities 
  • Securing all environmental permits under which facilities owned by the company operate
  • Identifying locations of potentially hazardous waste on the company site
  • Compiling a documented history of on-site spillage or leakage
  • Securing and organizing documentation about future expenditures for environmental programs related to operations of the company 

Environmental Due Diligence Checklist

Don't overlook the importance of a detailed investigation of environmental factors during due diligence. By following this checklist, you will have a much better understanding of what issues may be hiding under the surface.

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Environmental Assessment as One of the Most Important Due Diligence Factors

A common error among those beginning the process of purchasing a company or commercial real estate is overlooking the importance of doing a detailed investigation of the environmental factors that can significantly reduce the value of the targeted after the acquisition.

By following the Environmental Due Diligence checklist, you will have a much better insight into possible hidden issues and, consequently, you will be able to avoid future complications. More specifically, some of the most important benefits of this checklist are:

  • Becoming aware of potential environmental risks that could occur
  • Identifying whether or not the facility is facing environmental contamination charges
  • Learning of unfinished paperwork (which can cause a lot of problems, so it is best to identify unfinished paperwork early on)
  • Determining the history of the property and making sure all records are uncovered 

Main Environmental Matters

Before discussing any actions and plans about the acquisition or inspection of the environment, there are few crucial steps to take, such as:

  • Obtaining a copy of all written environmental reports for the last 5 years 
  • Acquiring notices, related to the company’s work, from environmental authorities 
  • Securing all environmental permits under which facilities owned by the company operate
  • Identifying locations of potentially hazardous waste on the company site
  • Compiling a documented history of on-site spillage or leakage
  • Securing and organizing documentation about future expenditures for environmental programs related to operations of the company 

What Tasks does the 

Environmental Due Diligence Checklist

 Include

General

  • Environmental reports for the last 5 years
  • Notices from environmental authorities for the last 5 years
  • Documented history of on-site faults
  • Leakage documentation
  • Spillage documentation
  • Permits for environmental facilities owned by the company operates
  • Documentation about future expenditures for environmental programs
  • Summary of policies regarding the environment
  • Summary of environmental planning or reorganization involving the target
  • Summary of environmental transactions
  • Details regarding environmental data for the time target spent in charge of the facilities
  • Environmental documentation of previous audits
  • Federal environmental documentation
  • Results of all environmental audits conducted over the last 5 years
  • Documentation regarding  containment inspection procedures

Environmental Due Diligence Audit and Its Advantages

This is the most important part of the Environmental due diligence since its primary purpose is to use different methods in diagnostics and solving the issues found. Without conducting this audit, the buyer is left vulnerable to financial and legal measures and the risk which the buyer is taking is equal to gamble. In order to thoroughly inspect the site these are the obligatory components:

  • Making sure that non-regulatory liabilities are reduced
  • If it comes to the property transaction, the audit will give you a clear insight in potential issues
  • Your energy and waste costs will be put to a minimum
  • Ensuring regulatory compliance to reduce potential fines
  • If spotted on time, you will be able to remedy the environmental issues in time for the purchase
  • Environmental due diligence audit can be done through several phases, starting from the site assessment methods, moving through remediation and solution of the site issues

Point by Point Audit Areas

Divided by areas of examination, this category offers all of the most important aspects of inspection:

Location

  • Permits in planning law
  • Protective areas data as development barriers

Waste

  • Cost risks of waste
  • Risk of liability in the disposal

Contaminated sites

  • Inspection of the contamination
  • Finding the aerial photography for the site in case it is missing

Sewage water

  • Cost risk of a sewage water system
  • Inspection of the contamination level

Chemical storage

  • The risk level of storage and handling the chemicals
  • Violation of the environmental liability insurance

Production and products

  • Product contamination cost risks
  • Risks of the accidents which could be reported

Energy

  • EEG violation
  • Energy-technical constructions cost

Occupational safety

  • Risk of cost for reported accidents
  • Managing direction liability due to violation of the obligation

The ESA Phase 1 as the Starting Action

The environmental site assessment is one of the crucial categories when it comes to environmental due diligence checklist, and the best way to start your environmental investigation.

It is responsible for uncovering all the environmental data you need before making a transaction:

  • On-site inspection of the present environmental conditions
  • Evaluating any environmentally hazardous site history, chemical spill residues, or chemical storage tanks
  • Interviews with responsible personnel,  previous owners, company directors, employees
  • Evaluation of other close-by property potential environmental risks, that could affect your target company
  • Conduct a detailed file search with public agencies
  • Review of the documents and federal records specified by AAI standards
  • Examination of the drainage patterns and historical aerial photography of the vicinity

Most common environmental faults found:

  • Mold
  • Radon
  • Wetlands
  • Asbestos-containing building materials
  • Lead in drinking water
  • Mercury poisoning
  • Debris flow

Possible Further Environmental Analysis

If a recognized environmental condition is found while running ESA phase 1 testing, further analysis of the site is requested to find out how much will the found issue affect the transaction. These tests are referred to as Environmental site assessment phase 2. These tests require the following action to inspect the site:

  • The initial screen of soil and groundwater testing to have a clear image of possible contamination
  • Analysis of groundwater samples and building materials to determine the quantitative values of various contaminants
  • Testing of the most frequent substances such as petroleum hydrocarbons, heavy metals, pesticides, and solvents.
  • Pollutant investigations and metrological system testing
  • Remediation as the last measure of analysis, if needed, can be divided to soil remediation and groundwater remediation
  • By the remediation process conducted on time, you will get a clean state of health and legal acceptability

Conclusion of the Environmental Due Diligence Checklist

It is important for both sides of the transaction that a robust inspection and examination of the environment is conducted. The buyer needs to be aware of the risks which could occur after the acquisition, and the seller will want to avoid potential legal measures for not having Environmental Due Diligence done. In summary, working with the Environmental Due Diligence Checklist will help you:

  • Cautiously identify potential contaminations
  • Thoroughly check the entire property
  • Collect all of the appropriate documentation
  • Obtain the necessary insurance based on your findings

FAQ

What Is Due Diligence?

Due diligence is a critical aspect of any deal that begins very early in the process and can continue right up until closing. During due diligence, the potential buyer asks questions and requests documentation from the seller that helps the buyer understand the target company and its business. These requests are usually general to start and become more specific as the buyer develops a greater understanding of the target. Buyers use the information provided by the seller to evaluate the opportunities and risks associated with the potential transaction. It is important for sellers to stay organized throughout the process. Buyers often submit thorough, detailed request lists that require input from numerous members of the seller’s deal team.

What is a due diligence checklist?

As the name implies, a due diligence request list is a list of questions and requests for information and documentation that a buyer submits to a seller in order to learn about the target company, its business and its operations. The initial diligence request list tends to be broad and typically includes an extensive list of questions covering a wide range of subjects. This allows the buyer to gain a broad understanding of the target company and identify key issues that can be investigated and considered more closely. Because every deal is different, due diligence request lists have to be tailored to meet the needs of the buyer and address the unique circumstances of your transaction.
However, there is a variety of fundamental requests that are relevant in most deals. These are the types of requests that our templates are designed to address.

What Questions Does the Master Due Diligence Questionnaire Include?

As the name implies, a due diligence request list is a list of questions and requests for information and documentation that a buyer submits to a seller in order to learn about the target company, its business and its operations. The initial diligence request list tends to be broad and typically includes an extensive list of questions covering a wide range of subjects. This allows the buyer to gain a broad understanding of the target company and identify key issues that can be investigated and considered more closely. Because every deal is different, due diligence request lists have to be tailored to meet the needs of the buyer and address the unique circumstances of your transaction.
However, there is a variety of fundamental requests that are relevant in most deals. These are the types of requests that our templates are designed to address.

Key considerations when using our m&a due diligence template

Our templates are drafted to provide an inclusive and wide-ranging list of initial due diligence requests. However, the templates, as well as the information contained therein, are not legal advice. They are not complete, and they are not specific to your transaction. The templates are designed to elicit general information from the seller that will provide the buyer with a broad overview of the target and it’s business and operations. You should review any template before using it, and it may need to be modified to ensure that it is suitable and relevant to your circumstances. Information provided by the seller will likely trigger additional questions that focus on specific aspects of the target’s business and issues identified during the due diligence process.

Are the requests in the template comprehensive?

No. Our Due Diligence Checklist is drafted to include typical requests that are relevant in most transactions. However, every deal and every target company is unique. Before utilizing any template, it is important that you review it with the help of your legal and other professional advisors to ensure that the requests are complete and tailored to the specific circumstances of your deal.

How to use the template with Dealroom

  • Start 14-day Free Trial of DealRoom and sign-up
  • Select a Master Due Diligence Template while creating a new room
  • Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Can I change requests in this checklist or add new?

Every M&A process is different. Downloaders are urged to make these checklists their own by changing the providing information to better fit their needs.

Does this questionnaire provide all the necessary integration information?

This checklist was created by and for M&A professionals. It includes a comprehensive starting point for the integration process. However, every deal is different and may require additional requirements and tasks.

How to use this template with DealRoom?

  • Start 14-day Free Trial of DealRoom and sign-up
  • Select an Integration Template while creating a new workspace
  • Start planning, assigning, adding to, and completing integration tasks. The Requests tab is automatically populated with the tasks from the integration template.

Key considerations when using our m&a due diligence template

Our templates are drafted to provide an inclusive and wide-ranging list of initial due diligence requests. However, the templates, as well as the information contained therein, are not legal advice. They are not complete, and they are not specific to your transaction. The templates are designed to elicit general information from the seller that will provide the buyer with a broad overview of the target and it’s business and operations. You should review any template before using it, and it may need to be modified to ensure that it is suitable and relevant to your circumstances. Information provided by the seller will likely trigger additional questions that focus on specific aspects of the target’s business and issues identified during the due diligence process.

Are the requests in the template comprehensive?

No. Our Due Diligence Checklist is drafted to include typical requests that are relevant in most transactions. However, every deal and every target company is unique. Before utilizing any template, it is important that you review it with the help of your legal and other professional advisors to ensure that the requests are complete and tailored to the specific circumstances of your deal.

How to use the template with Dealroom

  • Start 14-day Free Trial of DealRoom and sign-up
  • Select a Master Due Diligence Template while creating a new room
  • Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

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