Mergers & Acquisitions Case: Automotive Manufacturer
Pre-Acquisition Due Diligence & Financial Report

GaiaTech was retained by a private equity investment firm to perform environmental due diligence at three wheel-rim manufacturing companies that the firm was planning to acquire and merge. Two were in the U.S.; the other was based in Germany. Each had multiple and complex manufacturing facilities.

GaiaTech performed Phase I environmental site assessments (ESAs) and compliance audits at each location. Before the ESAs took place, the prospective buyer advised us which facilities they felt were duplicative in manufacturing and other operations and that they intended to close, and we adjusted our assessment scope accordingly. Where necessary, GaiaTech also performed Phase II sampling and evaluated potential exposures.

The most complex element of this assignment was our client’s request that GaiaTech determine what capital expenditures could be required given the merging of certain operations and the resulting increases in production as operations were transferred from closed sites.

In response, GaiaTech provided detailed reports that identified contamination issues, detailed deficiencies in compliance, and provided cost estimates to address the projected CapEx exposure for the company that would be created by the merger. In addition, we took the lead in presenting our findings to the banks providing debt financing for the transaction, explaining the risks and their possible impact.