ESG: IMPACT ON M&A

ESG IS BECOMING A KEY DRIVER IN SUCCESSFUL M&A

MERGERS OF ESG-FOCUSED ASSETS ARE MORE SUCCESSFUL

In M&A transactions it’s increasingly important to take into consideration ESG KPIs to gauge the compatibility of two firms planning a merger, as ESG synergies have shown to result in higher returns. In a recent study by Sustainalytics & Bloomberg, deals transacted between companies with comparable ESG scores outperformed those that involved companies with disparate stances on ESG by almost 20%.

ESG Cumulative Total Returns

ESG ASSETS ACHIEVE HIGHER VALUATIONS

As a result of various marco trends and also the increasing appetite of investors, ESG assets have consistently been displaying higher valuations than non-ESG assets. This can be seen across a number of indices.

   

   

FUNDS WITH A VEHICLE DEDICATED TO ESG

There is a huge recognition in the market of the imperative for ESG investing and various major asset managers such as BlackRock and State Street have already indicated that their investment decisions will be driven by ESG performance. An increasing number of leading funds have already created vehicles that are dedicated fully to ESG investing.

ESG and M&A – Case Study

Since 2017, GCA Altium’s ESG team has been working alongside the founders of Xllnc, a leading supplier of IT lifecycle management solutions for large corporations in the Nordics, transforming the business into a leading ESG enabler. This transformation has created significant value for Xllnc:

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Get a full overview of GCA Altium’s ESG expertise and analysis of the current ESG trends in the M&A market.

Contents

  • COVID-19 update – a few ESG considerations
  • ESG trends
  • Valuation benchmarks

Download the GCA Altium ESG Report