Management Buyouts in the Chemical Industry

Core Messages

• Chemical companies have identified the strategical value and are increasingly using buyouts as a method of portfolio management.
• Buyouts are being implemented for businesses where no buyer can be found, due to competetion law issues or companies are withdrawing from these businesses to focus on core businesses.
• Despite the high complexity and the low number of successful exits the chemical industry is still an interesting area for private equity companies.
• Private equity firms have to develop an understanding of the chemical industry, in order to achieve, together with management, an adequate appreciation value through restructuring and growth during the holding time.
• Financial investors do not differentiate between the various chemical sectors; the choice is made on the basis of the cash-flow relevant key figures.
• The most important and often underestimated success factor for buyouts is the quality of the management team.
• Advanced methods of management and employee participation play an integral role in the successful realisation of a buyout.
• As only a few exits of chemical buyouts have been successful, prudent planning of an exit scenario is important.
• The progressing industry structuring brings with it more complicated transactions, which in turn requires new co-operation models between industry and financial investors.
• Restructuring and the splitting of companies through financial investors and the subsequent sale of individual business units through the industry is for both sides advantageous, in particular with regard to complex deals.