Environmental Due Diligence
The assessment of environmental liabilities, such as contamination or regulatory non-compliance, that could affect the value of the target company.
Implications
The process of assessing the environmental risks and liabilities associated with a business transaction, such as an acquisition or real estate purchase, often involving the evaluation of compliance with environmental regulations, potential contamination, and the costs of remediation.
Example
Example: A manufacturing company conducts environmental due diligence before acquiring a factory, discovering soil contamination that would require costly cleanup, leading to renegotiation of the purchase price.
Related Terms
Different from standard financial due diligence, which focuses on financial health, environmental due diligence specifically evaluates environmental risks and liabilities.
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