Limited transaction screening of beverage manufacturer involving PFAS
At a glance
We provided a transactional screening for a beverage producer looking to acquire an existing operation including assessing past and current processes to evaluate possible future environmental and business risks. Since regulations and compliance obligations for PFAS (Per- and Polyfluoroalkyl Substances) are still evolving and can be difficult to navigate, PFAS-related liabilities are often either overlooked or misinterpreted by companies, potentially leading to broader implications.
The challenge
As part of a transactional screening, we reviewed operational documents, interviewed workers, conducted a site inspection, reviewed historical resources, and performed a third-party environmental regulatory database search. The challenge was to identify potential liabilities and/or implications resulting from current and past operations that may affect future operations and contribute to business risks/liabilities. Understanding how those risks may impact future operations and obligations allows the business to avoid (or monetize) potential future risks and plan accordingly. This review required a specialized skill set and a comprehensive approach to PFAS risk management that commoditized and rote due diligence activities can often overlook in the face of ambiguous regulatory landscape.
Our response
We responded to the challenge by conducting a thorough review of the regulatory databases, consistent with ASTM 1527-21 Standard for Phase I Environmental Site Assessments requirements, which now includes listings of possible PFAS users, manufacturers, generators, handlers, dischargers, and sites of known PFAS detection. These lists also include Aqueous Fire Fighting Foam (AFFF) related incidents and airport PFAS information. Over the course of this document review, we were able to identify co-located target property users and producers of PFAS-containing products, as well as link supply chain products used in operational processes that could potentially contribute PFAS to current and future operations. By assessing these factors and estimating the potential for impacts to future investigation, mitigation, and possible reporting obligations, we were able to provide the purchaser with valuable information to make a more informed purchase decision. This included identifying unanticipated risks to the deal, monetizing the potential costs to manage risks, and providing possible mitigation strategies that would benefit operations following the purchase.
The impact
Our comprehensive approach to PFAS risk management enabled the identification of potential product, business, and environmental liabilities related to PFAS. Our PFAS subject matter specialists provided valuable insights into PFAS risk management scenarios, including cost estimates and possible mitigation strategies to benefit post-purchase operations. The purchaser benefited from this information, which revealed unanticipated risks to the deal and allowed for more informed decision-making.