An In-Depth Look at Environmental Liability Transfers During Mergers and Acquisitions
Companies holding environmental liabilities are exposed to far more financial degradation than the estimated cost of the cleanup itself. This is especially true if environmental liabilities become part of a merger and acquisition (M&A) transaction. The mere presence of environmental contamination can produce a virtual quagmire of unquantifiable risk.
Many corporate holders of environmental liabilities are choosing to mitigate these risks through a transaction commonly referred to as an environmental liability transfer (ELT). During an M&A transaction, ELTs are used to remove environmental liabilities from the pending transaction while providing both the buy-side and sell-side with robust corporate indemnifications from and against all future environmental liability.