The Most Important Chemical Merger and Acquisition Job – valencegroup.com
With M&A transactions in the chemical sector showing healthy activity levels, chemical merger and acquisitions jobs are at a premium. Specifically, with all the hype surrounding the profits that can be made by acquiring a chemical firm and breaking into the sector as well as the growth options generated by potential cross-border mergers within the industry, advisors who can support M&A transactions with the appropriate degree of thoroughness and expertise are underutilized.
As with all M&A deals, due diligence is extremely important in the chemical industry. In general, a chemical sector due diligence specialist fills an essential role that with tasks such as conducting assessments, which include a review of industrial operations, relevant technologies and intellectual assets, and historic activities to determine long term potential and legal liabilities. These assessments should also investigate the specific niche that a target company fills, evaluating the consumer base and that market’s projected growth.
This brings up the highly relevant concern that most M&A “specialists” advising firms in the chemical industry often lack the qualifications to carry out the tasks outlined above to any satisfactory degree of accuracy. Unfortunately, most of those filling this type of chemical merger and acquisition job lawyers or accountants. They lack the technical and commercial expertise in the chemicals and plastics industry to make any kind of reliable assessment about a company’s chemical resources. Furthermore, this type of M&A analyst is governed by the philosophy of avoidance of risk. The lawyer is trained to see disaster around every corner and tries to get protection against everything that could go wrong, however remote and regardless of the fees he must charge to learn what those risks may be. Accountants emphasize the principle of prudence, which teaches that losses should be recognized as soon as there is a possibility that they will arise. Advice from these perspectives has its place, but is certainly not enough to offer a complete analysis of a potential M&A’s effects.
For this reason, M&A due diligence in the chemical sector should be divided into specific expertise compartments if possible. A third-party industry expert hired early in the merger or acquisition process can save thousands on the due diligence process and millions on the overall deal, and should have employees with the various expertise necessary to conduct all the relevant levels of analysis.
Another framework with which to consider the necessary jobs that must be done in a chemical sector M&A is considering how the deal will ultimately effect shareholders. This may seem obvious, but it’s a good way to try and lessen the potential influence of things like corporate and personal ego or excessive expectations. A good M&A advisory firm will consider protecting shareholder interests as one of its main jobs when it undertakes assessments of a target’s market/business, production/engineering resources, and finance condition.
There are certainly several other chemical mergers and acquisitions jobs, but those relating to carrying out timely and effective due diligence and ensuring its quality tend to be some of the best value for a firm considering a merger or acquisition.
John Brown is a retired financial advisor specializing in M&A deals. If you would like to learn more about merger & acquisitions in specialized niches visit Valence Group.
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