As the EHS professional, you will play a key role in this process. You will be asked to complete a comprehensive review and to gain an understanding of the seller’s current EHS programs and level of regulatory compliance for the site or sites under consideration for acquisition. In many cases, the work to evaluate a potential acquisition is completed by a consulting firm specially trained and qualified to conduct an environmental due diligence evaluation (commonly known as a “Phase 1”). This evaluation provides your company’s leadership with information needed to protect the potential investment in the new acquisition. A completed Phase I, as defined by ASTM E1527, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, is intended to allow a user to satisfy one of the requirements to qualify for “landowner liability protections” as a defense against alleged violations of CERCLA, the Comprehensive Environmental Response, Compensation and Liability Act, which governs liability for cleanup of an environmental release. The ASTM standard is rigorous and requires detailed documentation by an environmental professional to provide a valid assessment and legal defense. 

Other related documents and resources include OSHA logs (or the equivalent for the seller’s locations). The EPA’s TRI-ME websites will yield information from the agency’s Toxics Release Inventory about the chemicals processed or otherwise used at the seller’s site as well as those in the area surrounding the site. The type of chemicals used at the seller’s site will provide further insight on potential risks that need to be evaluated. Copies of applicable regulatory permits and permit applications can be obtained via Freedom of Information Act requests filed with the air district. You should also review publicly available information on the websites of local OSHA offices and their appeals boards. These sites publish decisions that can yield information on the site’s written compliance programs.  Finally, social media sites such as LinkedIn, and professional societies such as AIHA, can identify the names and work histories of the EHS professionals working at the site. Their work history, scope of responsibility, and certifications are an indication of the level of maturity of the site’s EHS program. Other documents of interest include copies of EHS programs and policies, occupational hygiene reports, community complaints, and workers’ compensation loss reports. A visit to the selling company’s website can yield information that will help you understand the level of maturity of the seller’s EHS programs. For example, sustainability reports that follow the Global Reporting Initiative will provide information on injury rates, compliance programs, environmental impact, carbon footprint, certifications for relevant ISO standards (14001, 45001, and 50001), as well as the type of projects that have been implemented to reduce the operation’s impact on the environment. The existence of a sustainability report further indicates the presence of a system for gathering and analyzing data. Sophisticated sustainability reports indicate that the seller uses robust environmental safety and health management system software to collect and analyze environmental impact data. These software systems usually require significant financial investment, which demonstrates the seller’s EHS commitment and provides additional insight into the seller’s EHS culture. Confidentiality regarding potential acquisitions can be extremely important. Maintaining a strong level of confidentiality and information security during the Phase 1 process can be difficult and should be part of the acquisition planning process. Leaks of information about a potential acquisition can have significant effects on the market values of one or both companies involved in the transaction. Employee morale and community perception can also affect the process and transaction. Your due diligence team and any contractors or consultants involved may need to use code names, rather than company names, to avoid letting word get out; outside entities involved in the process may need to work under confidentiality or non-disclosure agreements. Secured data review rooms, containing due diligence and other documents, may also be necessary; locating these rooms offsite may help maintain confidentiality.  SITE VISIT A great deal of information can be inferred from a review of records. You should then visit the site or sites under consideration for acquisition. A tour will yield invaluable information not readily available from records and websites. The purpose of the tour should be to identify potential risks that may be assumed by the acquiring company and define the appropriate representations and warranties needed from the seller. While performing a site visit, it may be necessary to work under a certain level of deception in order to maintain confidentiality regarding a potential acquisition (such as having visitors pose as part of a credentialing organization evaluating the facility). How visitors and contractors are managed helps you form an initial understanding of the safety culture. If the site requires all visitors to participate in an EHS orientation or provides an orientation guide, then you know that basic safety expectations have been established. Does the site require visitors to wear appropriate personal protective equipment, such as safety glasses and safety shoes? Are all visitors accompanied by a host who is accountable for the visitors’ safety? Are instructions provided to visitors and guests on what to do in the event of an emergency? The answers to these questions further define the level of maturity of the site’s EHS programs. The goal of your tour of the operation should be to determine how operational processes are being managed. For example, if the operation involves the spraying of paint or adhesives with high levels of volatile organic compounds, then adequate control measures should be in place. The local exhaust system should adequately capture the spray. A qualitative assessment of the capture efficiency can be made by simply watching the process.  The presence of good housekeeping, well-lighted work areas, adequate aisle space, automatic defibrillators, chemical eyewash and safety showers, labeled load capacities on racking systems, anti-fatigue mats, and adjustable work stations, as well as the use of ergonomic tools and aids, also suggest that systems are in place that yield both a safer workplace and optimized work flow. The presence of safety, quality, delivery, and costs (SQDC) boards indicate that employees are involved in managing all aspects of their work. Posted minutes of safety committee meetings, a system for reporting at-risk conditions and behaviors, and safety alerts are other indicators of the company’s safety culture. However, the safety culture cannot be verified unless you are allowed to speak with employees. Another indication of the EHS culture is the presence of visual safety aids in the workplace, such as posters, signage, designated aisleways for material handling equipment, and blue lights on forklifts that shine on the floor ahead of the forklift. You should see employees wearing the appropriate personal protective equipment, and wearing it correctly.  You should also review how those conducting the tour (typically senior members of management) interact with employees on the floor. Open and honest communication with employees is another indication of the culture. Managers should ask employees to explain how they conduct their work. These interactions, although brief, provide an opportunity to assess both compliance and potential barriers to EHS performance.  Evaluating a company’s safety culture is not an exact science; culture cannot be quantitatively measured. You must leverage your experience and knowledge when evaluating potential acquisitions. In addition to evaluating the safety culture, you must identify the need for expense and capital investments related to EHS. For example, the presence of improperly stored or managed hazardous materials or waste may indicate the need for a dedicated and properly designed storage building or spill containment. You must evaluate the need for, and quantify the costs of, eye and face protection or other PPE such as prescription safety glasses and safety shoes. In addition, the lack of air pollution control equipment for spraying operations, adequate machine safeguards, or local exhaust ventilation systems indicate the need to estimate the cost of implementing these protections. The goal of this evaluation should be to establish a budget to bring EHS programs and performance up to the acquiring company’s standard. AFTER THE ACQUISITION The real work begins after the excitement of the acquisition has dissipated. You will need to conduct an internal assessment of EHS compliance and conformance to the company’s internal standards. You should use a standardized comprehensive questionnaire to ensure that all gaps are identified and addressed. The use of an existing EHSMS software system will facilitate the process and provide a system for assigning responsibilities and tasks to the appropriate resources. This internal assessment should be completed with input from members of the site leadership team, including site and operations leaders, supervisors, human resources personnel, and those who have been assigned responsibility for managing the various aspects of EHS. For some smaller sites, there may have never been one individual resource hired to manage EHS. Managing the acquiring site’s EHS programs using existing resources may prove to be challenging. At a later point in time, justification for a dedicated resource may exist.  Often, the internal EHS assessment establishes the basis for additional resources. If the risks created by the gaps identified are unacceptable and cannot be mitigated without dedicated resources, then the business case for more resources can be made. If quick remediation of risks is necessary, then hiring outside consultants to accelerate compliance may be appropriate. Once the acquisition is completed, the integration of EHS cultures between companies is very important and may present problems such as competing or conflicting corporate EHS policies, programs, and procedures that will need to be consolidated. Be prepared for disagreements in these areas, especially when the acquired company has a strong corporate EHS staff in place. A meshing of the best personnel from both companies often provides the best end result. Issues with duplication of staff may also pose problems in EHS and other areas; reductions in staff or reassignments may be necessary. TYING IT ALL TOGETHER Due diligence teams typically comprise representatives from all functional areas including operations, human resources, legal, insurance, finance, EHS, and others. The members of these teams are responsible for evaluating the risks and opportunities in their functional areas presented by the potential acquisition.  The EHS professional works closely with the members of this team to provide a comprehensive evaluation. You should discuss observations and perceptions of site EHS programs with other members of the due diligence team. After all records have been reviewed, and site tours have been completed, you must deliver an overall assessment of the risks and opportunities presented by the potential acquisition. It is important to include both quantitative and qualitative inputs in this evaluation. EHS professionals must therefore use their experiences, technical knowledge, and intuition to conduct a balanced evaluation of the EHS risks and opportunities.   LORRAINE SEDLAK, CIH, CSP, FAIHA, is director of ESH&S at ITT Control & Connect Technologies in Irvine, Calif. THOMAS E. CASE, CIH, CSP, FAIHA, is a consultant based in Royersford, Pa. ALIZABETH ARAMOWICZ SMITH is senior EHS global consultant at Antea Group in Richmond, Ind. Send feedback to The Synergist.

Key elements of this process include reviewing the data generated by a Phase 1 and asking the acquisition support team to complete a limited health and safety review during the on-site Phase 1 investigation. This article identifies where it is important for EHS professionals to “plug into” the process, and the key data you should review to understand the EHS culture and risks that you will need to integrate into your company. The acquiring company should be permitted to submit questions to the seller that are generated as part of the EHS professionals’ review of the existing or completed Phase 1. The quality and completeness of the responses to these questions, as well as additional documents provided by the seller, form the basis of an initial assessment of the seller’s EHS programs. RECORD REVIEW Generally, all acquisitions require, at a minimum, a desktop review to screen the target sites for known issues. This review can include facility- or company-specific data requests, information in commercially available databases, and publicly available information from regulators, agencies, or other parties. Typically requested documents related to ASTM E1527 focus on: