EHS Compliance Considerations for Mergers & Acquisitions

If you stay with the same company long enough, there's a good chance you'll go through at least one merger or acquisition. And, if you've been through one before, you know just how much work is involved when it comes to environmental health and safety compliance.

Merging two businesses — and two EHS teams — poses a number of challenges. It’s not always easy, but with the right preparation and leadership a smooth transition is possible. From aligning compliance practices to reconciling software incompatibilities, here we’ll break down four EHS compliance considerations for mergers and acquisitions.

Review & document your processes

Over time, most teams develop their own ways of working together — from how they complete inspections, to how they prepare reports, to how they format spreadsheets and name documents. These processes usually evolve organically over many years as teams learn each other's strengths and preferences.

However, a major shift like a merger can throw a wrench in the works. Suddenly, two teams with wildly different practices (and personalities) have to combine their efforts — and that can take some getting used to.

If you're merging two EHS programs, having clearly defined processes can help make the transition easier. Documenting your essential processes and workflows will help you get new team members up to speed more quickly. On top of that, having a document people can refer back to will make your whole team more efficient by ensuring things are done the same way every time. No more wasting time wondering how to fill out an audit form or how to renew a permit.

Documenting your processes will also give you a chance to take a look at each process and find ways to be more efficient. What's working well? Where are the bottlenecks? What steps could be automated? These are all important things to think about.

Streamline your software systems

Here's what often happens during a merger: both companies are using their own software systems to manage compliance. Rather than make everyone switch over, they decide to keep using separate systems to get work done. Unfortunately, sharing data between these different systems is difficult. Reporting across both companies requires days or weeks of work. Duplicate data takes up space in both systems and results in inaccurate insights.

Whether both EHS departments combine or continue to operate as separate entities, it’s not a bad idea to move everyone onto the same platform. You’ll likely benefit from having a single system for collecting, analyzing, and reporting data across your entire organization. Not only that, but consolidating everything into one unified platform will save both companies money. In some cases, this might mean shifting the acquired company over to the parent company’s system. Or, it might mean looking for a new system that better suits the needs of your bigger, integrated team.

If you decide to replace your existing system, look for something that meets your needs now but also gives you room to grow in the future. This will ensure you don’t have to repeat the process each time your company expands.

Clean your data

Without good systems in place, EHS data becomes messy quickly. Information pours in from various sources, and spreadsheets grow to have hundreds of rows and columns.

Messy data can make the analysis and reporting process a nightmare. While your data might be workable for your current operations, reporting across the newly formed business can be downright impossible.

Before you combine data from both companies, you’ll need to spend some time cleaning your data. This means removing duplicate records, fixing formatting issues, and correcting misspelled words. It’s a time-consuming process, but one that will save you a lot of time and headaches down the road.

Of course, once your data is clean, you want to make sure it stays that way. No one wants to keep dealing with dirty data, but that’s exactly what will happen if you don’t have a good system in place. All of this can be avoided by using EHS compliance software. Software standardizes the way your organizations collect and manage data. This will make it easy to perform data science work and report across both businesses.

Preserve institutional knowledge

Turnover is inevitable during a merger or acquisition. Some staff may be laid off during the transition, while others might opt to leave voluntarily. In any case, it's important to think about how you'll preserve institutional knowledge — ideally before a big change is announced.

You'll need to have a record of what each person was working on, where their documents are, and how they perform certain tasks that are unique to them. The last thing you want is to find out that the files you need are on the employee’s laptop, which walked out of the office when they did.

If you have an EHS compliance software system in place, this will be much easier. You'll be able to see what each person is working on, when it's due, and what documents are attached. And, with everything stored securely in the cloud, you’ll be able to access important documents and data from your own computer instead of losing them forever.

Final thoughts

While the overall number of mergers and acquisitions is down in 2020, nearly a quarter of companies are planning to continue or even accelerate deal activity according to a survey by the M&A Leadership Council. Some companies are looking to take advantage of low interest rates and favorable valuations to expand their offerings. Likewise, companies in hard-hit sectors such as oil and gas are consolidating in order to reduce costs and survive the economic slowdown.

For EHS leaders, preparation is key. Having systems in place to track compliance obligations, manage data, and preserve institutional knowledge will help your team not only survive the M&A process, but thrive. And even if a merger isn’t on the horizon, these strategies will help your team prepare for future disruption no matter what comes your way.

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