After a pause for several years, deal activity is on the rise again in the chemicals sector. Chemical companies typically use transactions — including acquisitions, divestitures, alliances, IPOs, outsourcing, licensing and financial arrangements — to achieve two broad types of business objectives:
- Sustaining “good growth”, defined as increasing profits beyond expansion costs. According to a recent PricewaterhouseCoopers study, companies that consistently outperform their competitors place a high premium on “good growth”.
- Reducing costs by divesting less profitable operations, sourcing product from emerging markets or outsourcing non-core business functions.
While companies may look to deals to help them achieve certain financial goals, the benefits of any particular transaction can often prove to be elusive. Case in point: 60 percent of acquisitions destroy value for the buyer’s shareholders, while only 40 percent capture expected costs synergies.
How PricewaterhouseCoopers can help you
PricewaterhouseCoopers’ transaction services group helps chemical companies use transactions to reach their business goals and improve returns on capital invested. We do this by uncovering each deal’s hidden opportunities and risks; and by expediting the transaction process. Regardless of the deal’s objectives — whether it’s to diversify, enter new markets, go public, access capital markets, reduce costs, exit non-core or less profitable businesses, or deploy capital more efficiently — we can help you price deals more realistically and bid more appropriately. As evidence, favourable modifications to the purchase and sale agreement are made on the majority of the deals on which we are engaged.
