Major global economies have been resuming industrial production operations in recent months. While there are still many unknowns about how the world will be altered in the aftermath of the pandemic, the chemicals industry, as the backbone of industrial manufacture, has begun to reap the benefits of economic recovery, low inflation, and abundant capital. Chemical businesses will need to restructure their value chains, handle severe operational interruptions, and review their global supply chain and presence to overcome the residual uncertainty.

Market View

  • Especially in speciality chemicals and ingredients, growth is being driven by rising CEO confidence, available funding at low interest rates, and good deal valuations.
  • As the supply chain of the future continues to take shape, we expect investors to look across the value chain in order to identify opportunities to better serve their customers and end-consumers. This may result in M&A activity across various subsectors as companies seek to expand and diversify their supply chains as a hedge against disruption.
  • Chemical’s assets are in high demand, resulting in higher transaction valuations, which is attracting more sellers from both private equity and corporates.
  • Corporates have mostly escaped the COVID-19 crisis unscathed, with healthy balance sheets. Some companies that have been sitting on the sidelines due to the uncertainty are now looking for M&A opportunities, and private equity firms are becoming more active on both the buy and sell sides.

Market Outlook

Higher deal multiples draw out sellers

Greater divergence in strategy

Greater PE activity and flexibility

Greater prevalence in cross-border M&A