Getting the deal done—While managing process safety risk

Abstract

AbstractHistorically, chemical complexes originated from a single company that developed a large site with significant infrastructure and diverse operating units. However, as corporate objectives change, companies frequently consider alternative business models such as mergers, acquisitions, leases, and licensing agreements. These deals (referred to as mergers and acquisitions [M&A] in this paper) often result in a shift from the single owner/operator structure toward other ownership, operating, and service provider models. These models can create substantial value; however, if not properly managed, they can also increase risk. Assessing these deals to manage process safety risk is challenging; deals are often confidential, the scope is sometimes fluid, and there is limited time to complete the process safety evaluations. If significant deal risks cannot be mitigated, concerns need to be elevated to upper management so they can be addressed before the deal is signed. Contract provisions may also be needed to clarify expectations and ensure continued safe operation. This paper discusses the challenges in assessing potential M&A deals from a process safety lens and describes a work process for engaging with the M&A team, conducting preliminary screening and more detailed assessments, communicating the results, and incorporating key agreements into the contract language.