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  • PWC

ESG Impacting Private Equity Exits

Environmental, social, and governance (ESG) issues are increasingly impacting exit opportunities for private equity firms. But keeping up with ESG standards remains an ongoing challenge, especially for mid-market managers, says KEY ESG. Its survey of firms in Europe, the UK, and U.S. shows firms can take as long as up to 12 weeks to collect the proper ESG data, which often results in missing reporting deadlines. This can stall exits or cause deals to fail. “When it comes to your exit process, for instance, more and more buyers will be doing ESG due diligence when they are acquiring a business,” says Heleen van Poecke, chief executive at the firm. “That means if you have any ESG risks in that portfolio company, if there are any environmental damage that you’ve caused by your activities, or you have problems within your workforce or a lack of diversity, it means that you don’t have the right governance, policies, and procedures in place. That is something that will come up as a red flag in diligence now.”

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