The value of transaction has almost doubled since 2009 and increased by 2.5 time since 2008
The real activity is even higher than data suggests due to the longer process of deal making in the post recession period.
Deal activity by the number of deals2006-2010, H1 www.ennovance.com
The number of deals went up by 117 deals
The focus has shifted toward small (under 100 million) and middle size deals (100-500 million)
Reason: Due to the economic downturn, the companies are more focused on their core businesses and tend to acquire divestitures rather than whole companies to strengthen their performance
The acquisition of the divestitures have a higher proof of success for buyers and sellers
Transaction types in Chemicals
Sharp decrease in bankruptcies, BuyBacks
The number of IPOs has doubled since 2009 and tripled since 2008
A steady increase in Shelf registration across the years
As the financial situation improves, we observe many solvent companies willing to exit through IPOs.
The increase in IPOs demonstrated the strengthening demand for chemicals from the institutional investors – good news for PE firms.
However, due to the existing uncertainty in the current market, many are still waiting for more profitable conditions and complete Shelf registration with the expectation to exit in the next 3 years.
With the improvement of the economy, only 7 bankruptcies were announced in 2010
The number of IPOs, Shelf registrations, and M&A activities stays in line with the numbers from 2008/2009
The increase in M&A transaction is expected to become stronger in 2H due to the overall improvement of the economy and easier access to credit
A 2009 tend of going private and abandoning the public shares is expected do be slowing down in H2 of 2010 as the financial performance of many improves
Most Active Sellers (Ultimate Parent) Pharmaceuticals, 1H - 2010 # of deals Total Value Sold 13,867.68$ 4,978.14$ 2989.1$ www.ennovance.com
Most Active Sellers (ultimate parent) Chemicals, 1H 2010 # of deals www.ennovance.com
Chemical Industry trends and outlook Chemical companies are operating below their capacity Higher M&A activity, increased competition and more deals made by specialty PE firms New or Green Technologies New Opportunity due Regulation and Climate Change ……. ……. www.ennovance.com
Pharmaceuticals: Trends and outlook Strong activity in cross border deals Weak M&A activity in the US and EU in comparison with previous years A flood of companies “exits” is expected from the PE firms as a result of the PE investments earlier in the decade. ….. ….. www.ennovance.com
Market for M&A Today: Deal Catalysts: Economic downturn: the existing market conditions offer a wide spectrum of opportunities for M&A in Chemicals Acquire companies thorough potential partnership approach Sellers generate more 13% more profit The acquisition of the divestiture in 57.7% generate positive returns as opposed to 41.7% when buying the whole company Long value chain and complex industry; …creates opportunity for industry experts, deep knowledge with extensive network Environmental risks is a fear for generalist investor Falling stock market works both ways Focus on value instead of a deal price or multiples …….. www.ennovance.com
Remarks Due to confidential and proprietary nature, Ennovance Capital published only a few slides. Sources used: Primary market research Secondary data sources includes, but not limited to Capital IQ, Thomson One Banker, VC Experts, and various industry related reports etc. www.ennovance.com WWW.ENNOVANCE.COM BLOG: http://ennovance.blogspot.com/ Phone: +1 (800) 901-1006