ESG and sustainability consultancy ERM and a number of law firms have assisted the Itago IV fund in its acquisition of a controlling interest in Operamed via a leveraged buyout. Operamed is a major player in the Italian and international markets for its design and installation of modular outdoor and indoor solutions in the healthcare sector. Among its other services, Operamed designs, supplies and installs turnkey prefabrication systems for critical areas in hospitals, such as operating theatres, intensive care units, diagnostic areas, laboratories and wards.
ERM advised Itago on ESG due diligence with a team led by partner Giovanni Aquaro. Itago was also advised by SLT Strategy Legal Tax on financial and tax due diligence and the structuring of the transaction, by Goetz & Partners on business due diligence and by Ethica Group on financial matters. The sellers, who retain a minority stake in the company, were advised by Gianni & Origoni on legal matters and by BDD Advisory on financial matters.
The operation was financed by Banco BPM, assisted by Orrick.
An Interview With Giovanni Aquaro at ERM
Please tell us more about your ESG due diligence work as part of this deal.
Our ESG due diligence work on Operamed focused on understanding the key elements, or material topics, that could represent the main ESG (Environmental, Social and Governance) risks and opportunities for the company. Considering the small size of Operamed, the due diligence work prioritised topics able to generate business value for the company, thus contributing to its sustainability performance, business results and ability to respond to external pressures (e.g. from regulators, clients, competitors, etc.). To frame the analysis within the evolving ESG scenario, we performed a review of current sector’s trends. As a result, we advised Operamed on the next actions to take in order to best prepare for future challenges and leverage linked opportunities.
What issues are likely to arise in transactions like this and how do you avoid them?
The main issue arising in transactions involving small and medium sized companies is the lack of a structured data collection and monitoring system. During the due diligence work, it is crucial to understand which data are collected and reported, what just needs to be collected in a more standard and efficient way and whether a real data gap exists. As risks related to lack of information exist (e.g. difficulties in monitoring trends, lack of basis to define improvement targets, etc.), the company can minimise them by defining internal responsibilities in charge of structuring a data collection system, gathering and monitoring information and reporting them back to the investors.
When is acquiring a majority stake a wise move for a private equity house?
Acquiring a majority stake in a company represents a great chance for a private equity house to make a strong impact on its strategy, directly supporting the improvement of its ESG aspects. Being a majority stakeholder, the firm can convey to its portfolio companies the sustainability commitments that are part of its purpose and achieve the target that have been set at the company management level.
