In this video, we’re covering a critical area of due diligence—environmental determination. This can significantly impact acquisitions, as no buyer wants to take on your environmental problems. If an issue is discovered, it can take up to three years to clean up, which is why we use escrows in these situations.

Each state has its own environmental agency, and while their processes vary, they all aim to issue a "no further action" certificate once the property is clean. It’s crucial to hire a competent environmental consulting firm to guide you through the process, as some consultants may not be as reliable as they seem.

The process typically involves several phases. Phase one identifies potential problems, and if needed, phase two involves deeper testing. It's best to hire a reputable consultant from the start to avoid redundant efforts, as any potential buyer will likely conduct their own phase one assessment.

I’ve seen firsthand how important this is. In one case, two manufacturing facilities were being sold. One was cleaned up within 90 days, but the other took three years to resolve. The escrow in that case held $350,000—no small amount.

The takeaway: Environmental issues are complex, and you’re not expected to handle them on your own. But with the right advisors and consultants, you’ll be equipped to navigate these challenges smoothly.