Ensuring ESG Compliance and Supply Chain Transparency for a European Private Equity Acquisition

The Opportunity

Assessing ESG and Supply Chain Risks Before Acquisition

Our client, a European private equity firm, was evaluating the acquisition of a Nordic high-tech electronics manufacturer whose production was fully outsourced to contract manufacturers in China.

Because the target company relied heavily on external suppliers, the client needed better visibility into operational risks, supplier practices, and ESG-related issues before moving forward with the acquisition.

We joined to conduct ESG and operational due diligence across the target’s Chinese supply chain and provide a clearer picture of potential risks tied to the supplier network.

The target company had limited direct control over manufacturing operations since production was fully outsourced to third-party suppliers in China.

This created several challenges during the due diligence process, including:

• Limited visibility into supplier operations and manufacturing practices
• Potential ESG risks linked to labor, environmental, and governance standards
• Need to verify actual supplier capabilities and operational conditions on-site
• Lack of independent operational validation before acquisition
• Risk that supplier-related issues could impact future business performance after the transaction

The client needed practical, fact-based insights from the ground in China rather than relying only on supplier documentation or remote assessments.

OUR SOLUTION

We conducted desktop research, supplier data reviews, and interviews with management teams to better understand the target company’s supply chain structure and operational setup.

Our team then carried out on-site visits to supplier facilities in China to verify manufacturing capabilities, production processes, and ESG practices directly at the factory level.The assessment covered operational processes, environmental and labor practices, governance standards, and overall supplier reliability. Based on the findings, we prepared a due diligence report highlighting key operational and ESG risks, together with practical recommendations to support the investment decision-making process.

The RESULTS

The project helped uncover risks that would have been difficult to identify through remote review alone, giving the client a more realistic picture of the target’s supplier operations in China.