Valuations of Chemical Companies and Distributors: Comparable Metrics and Precedent Transactions

Abstract

Over the past 20 years, private equity firms and strategic buyers have aggressively invested in chemical companies, including the logistics supply chain of chemical distribution. The availability of public funds at meager interest rates is the main reason that mergers and acquisitions are happening at such a high pace. Company valuation then becomes very important to determine the value of the deals. Public chemical companies’ comparable metrics, together with profits from precedent transactions, can provide a handy guide for both strategic buyers and private equity firms when considering an acquisition.

TOPICS: Private equity, commodities, fundamental equity analysis, portfolio construction