Understanding Complexities That Chemical M&A Specialists Overcome

The chemicals M&A activity slowdown through 2008 and 2009 provides several clear examples of the complexities that chemical M&A specialists face in providing effective and advisory services. Despite the best knowledge of the industry, the strongest history of chemicals investment banking, and an intimate familiarity with all the factors typically necessary to make the right business choices in the sector, many chemical M&A advisors found themselves unable to help clients meet their growth goals in 2008 and 2009. The situation of the economic recession at the close of 2008 and start of 2009 left many commercials sectors, the chemicals and related sectors among them, hamstrung by a global lack of equity and reigning caution.

Part of the problem is that a general lack of confidence led to valuation disagreements. In the end, accurate valuation followed by efficient M&A execution is one of the most important services that chemical M&A advisory firms offer, as this allows clients to make the acquisitions or sales needed to generate their desired growth. But this is only the case when accurate valuation can lead to completed deals that either generate capitol or expanded capacity. Of course everyone has to deal with economic cycles and many successful investors and advisors have built their success on effectively reading and using these cycles. But when this type of external factor dramatically affects buyers' mindsets to the point that agreeing on a value is nearly impossible, chemical M&A specialists' jobs become much more difficult.

The 2008-2009 chemicals M&A slowdown demonstrates this complexity in another way. Part of how M&A advisors originate M&A-fueled growth plans and execute transactions is based on being able to identify key resources in potential targets and predicting how those resources will benefit future performance. Yet with materials prices behaving oddly in 2008 and the first half of 2009, and firms having difficulty forecasting their own earnings potentials and wings' productivity, this became a less straightforward proposition.

What are the implications of this reality for the current chemicals sector? Considering how distressed assets sales in the sector through the end of 2009 helped to encourage more activity and growth in 2010 that returned chemicals M&A activity to pre-slowdown levels, 2011 may be a return to business as usual. Various chemicals sectors will behave differently as a result of the restructuring that came from 2009-2010 deals, and rebounding CEO confidence coupled with continued consolidation will support the demand for chemical M&A specialists.


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Chemical M&A specialists routinely interpret and navigate several types of sector complexities unintelligible to other banking advisors.