Chemical Consulting: Transaction and M&A Support

Robust company, market and industry analysis, authored by highly credible and experienced consultants, is critical to effectively define the scope, understand viability and successfully execute and close a transaction.

Built on IHS Markit reputation for integrity and our extensive industry intellectual capital and proprietary information, our consulting team are leaders in providing both commercial and technical due diligence to support M&A transactions. From risk advisory to business plan projections, we provide advice and support on all aspects of the lending, purchasing and selling process. Whether you are involved in asset valuations, mergers and acquisitions, project economics or technical analysis, we can streamline your decision-making process.

Combining the unmatched breadth and depth of the information and insight provided in our multi-subscriber databases and reports, with our consultants' first-hand industry experience, we are well placed to understand the issues, concerns and considerations whilst evaluating the deployment of capital for a potential transaction.

We can help answer:

What is the potential upside and downside of a transaction?
How does the IHS Markit forecast compare with the company's business plan?
How can we better understand the integrated structure of a competitor's business?
Are there premium products and what is the outlook for margins?
How does the company differentiate itself from competitors?
How strong is the company's IP position?
How well maintained are the assets?
What are the risks associated with this transaction?

Our capabilities include:

Technology and IP position assessment
Commercial and technical due diligence
Target acquisition screening
Buy-side and sell-side analysis
Risk advisory
Cash flow and profit margin projection
Operational and financial sustainability
Business performance assessment
Mergers & acquisition support

Qualifications and Experience

This list is not exhaustive and is intended to serve as an introduction to IHS Chemical Consulting’s breadth of services offered:

Project Name	Project Description
Buy-side Due Diligence on a Major Regional Petrochemicals Producer	For a private equity firm, IHS performed buy-side commercial and technical due diligence analysis of a major regional gas, NGLs, petrochemicals and rubber producer. IHS combined teams from Energy, Downstream and Chemicals covered the operations and value chains served by the Target company. Our project teams carried out site visits to assess production facilities, developed market and price outlooks for all of the energy and chemical products of the Target, and reviewed the commercial (cost, price, volume) inputs to the 5-year business plan including maintenance and logistics costs. IHS report documented the full technical and commercial assessment of the business, risks to the business plan and critical valuation drivers.
Technical Due Diligence	IHS Chemical was retained by an international bank to provide a technical due diligence on the buy side of a Russian petrochemical company’s divestment of its fertilizer assets. IHS Chemical visited the sites and attended the Management Presentation to gather operating information and management views. IHS presented its view on the operational state of the assets and prepared a report for the bank and the eventual buyer.
Restructuring of a Chemical Producer	IHS Chemical was retained by a creditor bank to analyze the business and financial situation of a chemical producer on the verge of bankruptcy. IHS Chemical advised the bank, the Client Company, and the bankruptcy court, valued the assets, and commented on financial statements and vendor lists.
Investment / Sell Side Analysis for a Portfolio	For a mid-tier private equity firm, IHS developed an analysis of future US and USGC industrial activity for 2015 through 2020. This work was based on IHS outlook for energy and chemical supply, demand and capacities, and energy and chemical prices. The project estimated industrial capital and maintenance expenditures, and was also based on IHS Global Insight outlook for GDP by country and region, and IHS Energy Insight outlook for oil and gas production and prices.
Profit Outlook for a Major Petrochemical Company	For a private equity firm focused on equity and credit investments, IHS developed an outlook for each of its many products, including a SWOT analysis (demand growth, industry consolidation, product substitution, cost competitiveness and technologies), and developed a detailed “bottoms up” operating cash flow model consistent with IHS energy and chemical price forecasts.

Case Studies

Chlor-Alkali Independent Engineering

Challenge: Chemical was retained as an independent technical advisor to the project sponsors of a venture to construct a US chlor-alkali facility.

Solution: We advised the lenders on the major technical issues that could lead to delay, cost overruns, performance shortfalls and any other technical or operating risks that could have an impact on the sponsor’s ability to service its debt.

Results: The client received multiple services, including technical reviews, plant operations, construction, cost schedules, site integration, permitting, contracts, environmental compliance and financial analysis. As a result of our site visits to monitor construction, the project sponsor received updates.

Independent Engineering for South American Plant

Challenge: Chemical was retained to act as independent engineer for a chlorine, caustic and calcium chloride facility in South America.

Solution: We performed technical due diligence to include reviews of project design, construction and operating plans, completion tests and guarantees, along with project operations and maintenance. We visited the site to assess suitability and reviewed all project agreements as well as the status of project permits and licenses. The client provided project proforma, and we assessed capital costs to confirm reasonableness of assumptions and accuracy of results.

Results: We confirmed project compliance from an environmental and social standing and were subsequently engaged to monitor monthly construction, performance and operations.

Business and Asset Valuation of Major Integrated Fibers Producer

Challenge: Chemical was hired to provide market and business analysis, as well as asset valuations for the combined assets of two integrated fibers producers. The two companies’ assets included nylon, spandex and polyester resins and fibers, as well as their respective intermediates products.

Solution: We worked with the financial advisors and the sponsor to create asset valuation models based on discounted cash flows and factored replacement costs. The business and market evaluation included competitive cost comparisons, market share evaluations and market segment analysis.

Results: The analysis was used to syndicate the debt offering.

Due Diligence Support of an Engineering Resins Business

Challenge: A private equity firm hired Chemical to help assess a global plastics styrenics business.

Solution: We conducted a multi-phase due diligence approach that encompassed analysis of raw materials, markets, manufacturing and economics. We provided an in-depth market analysis along with a company analysis focused on assessing management projections, restructuring plans, product development and development of a financial model. We developed a market evaluation and competitive assessment for five global engineering plastics business lines. We developed market profiles and cost and margin models for the engineering plastics, as well as for integrated upstream positions in feedstocks and intermediates. We subsequently performed an in-depth data room review followed by multiple manufacturing site visits and assessments in the US, Europe and Asia. Our investigation focused on manufacturing asset condition, operability, technical proficiency in manufacturing, and associated product and process development capability.

Results: Each phase was completed with a diligence presentation designed to meet the needs of financial institutions.

Middle East Technical Consulting Review

Challenge: Chemical was retained to witness the construction of a petrochemical project in an industrial development in the Middle East.

Solution: In this capacity, we discussed with senior management the current progress and toured the site to witness construction.

Results: The client received multiple reports that kept senior management updated on current progress and summarized key findings of site visits.

Propylene Splitter Feasibility Project

Challenge: Chemical was retained to help a financial institution understand the overall viability of financing a US$100 million propylene purification splitter in Latin America.

Solution: We developed a financial model of the splitter.

Results: The client received 15-year cost and revenue projections, scenarios of potential periods of cash flow deficiencies and recommendations on hedging risks associated with the product-to-feedstock gross margin. The client also received our commentary on market fundamentals, competitors, expected end-use markets and potential propylene derivative investments.

Customer Stories

Global Chemical Company Strengthens Leadership in Solar Energy Sector with Strategic Market Insights

One of the world's largest chemical companies has established itself as a leader in the solar energy sector by providing materials to manufacturers of photovoltaic (PV) cells. At a time when two-thirds of other providers went out of business, this company has successfully balanced its client portfolio and expanded its business in this sector.

Learn more about our client’s successes

Alberta's Industrial Heartland Association Uncovers Strengths and Attracts Unprecedented Interest from Global Investors

Dedicated to promoting sustainable development of Canada’s largest hydrocarbon processing region, this leading association gained objective, third party expertise/credibility for investor research that identified Alberta's 4 most competitive chemical products -- and brought 11 companies to Alberta for tours and discussions .

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Chemtura Uncovers Market Trends to Drive Innovation and Open Up New Business Opportunities

As a leader in the global specialty chemicals market, this US-based company has compressed business development research efforts from several months to a few weeks − supporting faster time to market -- as well as promoting a broader understanding of customer needs and uncovering fresh ideas from other fields.

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Anadarko Advances Liquid Natural Gas Commercialization Opportunity in Mozambique with Third-Party Study

One of the world's largest independent energy exploration/production companies responded to a request from the Government of Mozambique by sponsoring a third-party study of requirements for developing trillions of cubic feet of natural gas as well as the value of related mega-projects for the local economy and people. The study was completed in only 30 days.

Learn more about our client's successes