Resilience capex addressed risk before closing, protecting valuation.
A private equity firm preparing to exit a portfolio logistics company wanted a physical climate risk assessment ahead of buyer due diligence, after an earlier informal review flagged flood exposure at two of the company's five distribution centres without quantifying the potential valuation impact.
The firm's deal team needed a number, not just a flag - buyers would want to know what the exposure meant for asset value and what it would cost to fix, not simply that a risk existed.
SYNE ran the portfolio company through the Climate Risk Management engine, translating physical exposure at all five sites into a SYNE Climate Value at Risk figure, with flood risk at the two flagged distribution centres modelled under multiple warming scenarios.
Working with the deal team, SYNE scoped a resilience capex package - flood barriers and drainage upgrades at the two exposed sites - sized specifically to bring the Value at Risk figure down before buyer due diligence began.
The resilience capex was completed ahead of the data room opening, and the updated Climate Value at Risk figure was included directly in the information memorandum rather than left for buyers to estimate themselves.
The deal closed at the firm's target valuation, with the buyer's own diligence team citing the pre-emptive resilience work and the quantified risk figure as having removed what would otherwise have been a valuation discount negotiation point.
Distribution centres assessed
Sites remediated pre-close
Deal closed at, with risk pre-addressed
This is an illustrative scenario built to show how Climate Risk Management is applied in practice, not a case study of a real, named client. See the Climate Risk Management for the full framework behind the outcome described above.
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