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BOTTOM LINE
Deep insight from our thorough assessment led to the development of a robust and highly successful sell-side strategy. The result was a business sale that exceeded 20X the EBITDA multiple, with the seller and buyer goals achieved.
The Challenge
ChemQuest was initially hired to review a diverse company portfolio that included a unique high-margin niche additive technology platform in the home and laundry care market, as well as unrelated niche formulated product offerings. Following a deep dive into growth opportunities, our team advised that the divestment of the additive platform would yield an extremely high profit for the parent company if the right buyer was identified and an appropriate deal structure was established.
Could ChemQuest identify and vet buyers interested in acquiring a technology platform with the potential to bring a high-margin, established business to a new owner?
Financial and Strategic Plan Based on Untapped Growth Opportunities
ChemQuest is uniquely positioned in the consulting space because our subject matter experts have expertise not only across the specialty chemicals value chain but within our four business pillars (Business Strategy & Transformation, M&A Advisory Services, Operational & Manufacturing Efficiencies, and Technology Development). Teams work synergistically across these pillars to deliver the highest value to our clients, as well as hand-in-hand as strategic thought partners with our clients to identify the best path forward for their business.
As is often the case, our team began this project by conducting a thorough discovery process to understand the core competencies of the client’s existing business. Guided by deep experience in the specialty chemicals sector, we went through a multi-stage process that included:
- Assessing the client’s IP and polymer science capabilities as related to expansion opportunities
- Examining adjacencies to drive higher returns for the company’s business units
- Identifying and ranking the attractiveness of all opportunities across the portfolio
- Developing various strategies, including options, sensitivities, key risks, and an M&A thesis
The team built a future forecast based on a bottom-up business model and presented all of their findings to the client’s board of directors, along with a recommendation to divest the additive technology platform. The board agreed to explore divestment opportunities.
The next phase of the project built on the strategy work that had been done to date, using that information to create a basis for growth opportunities presented in the confidential information memorandum (CIM). Additional steps in the sell-side process included:
- Enhancing the investment bank’s list of identified buyers with strategic buyers based on our team’s deep industry knowledge and relationships
- Developing buyer profiles using our consultants’ extensive industry connections, technology expertise, and specialty chemicals business acumen
- Using customized Pugh Matrix methodology to rank and prioritize buyer candidates for the best fit to our client’s profile and needs, including an all-cash deal
The Results
Through a thorough study of the client’s unique technology platform, ChemQuest identified organic and inorganic opportunities for the parent company. Our assessment revealed the greatest financial opportunity for the parent was to sell the business unit.
ChemQuest’s deep roots and relationships in the industry enabled the identification of an ideal strategic buyer and created a win-win result for both parties. The sale of the additive platform ultimately exceeded a 20X EBITDA multiple (all-cash and well above the industry average). As a result, our client was able to pursue organic and inorganic opportunities to grow its remaining businesses.
About Us
The ChemQuest Group, Inc. is widely recognized for its value creation in the specialty chemicals and advanced materials sectors among raw material suppliers, formulators, and financial investors. Our four service pillars include Business Strategy & Transformation; M&A Advisory Services; Operational & Manufacturing Efficiencies; and Technology Development, which we undertake through the ChemQuest Technology Institute and ChemQuest Powder Coating Research.
ChemQuest services extend across numerous formulated product categories and end-use markets within the specialty chemicals value chain. Our team includes former senior managers from major manufacturers, business owners, and senior technical managers, including Ph.D. chemists, with a minimum of 25 years of experience in specialty chemicals.
How can we help you? Let’s start talking: https://chemquest.com/lets-start-talking/