Reduced risks in business and real-estate transactions
TÜV SÜD provided technical and environmental due diligence services for the sale of Open Grid Europe GmbH by E.ON
Valuations for business and real-estate transactions frequently neglect risks related to technical infrastructure, building fabric and aspects of environmental law. TÜV SÜD supported the sale of Open Grid Europe GmbH, a subsidiary of E.ON AG, providing technical and environmental due diligence services. Within the scope of its due diligence review, TÜV SÜD examined the relevant economic aspects of the transaction from the perspectives of technology, the environment and safety.
OGE operates the longest gas transmission network in Germany, spanning 12,000 km. Two-thirds of the natural gas consumed in Germany every year is transported through this network. The sale of OGE to an investment consortium marked the largest M&A transaction of the current year.
Integrated due-diligence approach
Within the scope of technical due diligence, TÜV SÜD's experts review the assets of the company under sale to provide an impartial assessment of the condition of the assets. They also take a close look at the organizational and process structure of operation and maintenance (O&M). The survey of asset condition supplies initial results which deliver important indications for the future of the plant. Questions about the quality of technical infrastructure and maintenance strategies, too, can be answered on the basis of this assessment. Assessment of the outlook, such as whether enough qualified staff will be available in the future, also plays an important role.
Environmental due diligence examines aspects such as the possibility of contamination, which may include environmental impacts caused by the operation or dismantling of technical infrastructure. In addition to compliance with legal requirements, the experts must also take into account developments in environmental law. Given this, environmental due diligence frequently also covers aspects of occupational health and safety and civil defence.
By identifying the answers to these questions, the experts can assess the key performance indicators of the business plan – including future investments, operating expenses and replacement investments – and their future development. After all, changes in the legal framework, market conditions and the performance of technical infrastructure can lead to higher costs but also higher revenues.
When E.ON offered OGE's gas network for sale, the experts impartially assessed the condition of the gas network. "On the basis of our integrated due diligence approach, we scan all aspects of a business and real-estate transaction thoroughly", says Gerhard Klein, Head of the Center of Competence Due Diligence at TÜV SÜD Industrie Service GmbH.