INDUSTRIES SERVED

Chemicals

Industry Overview

This industry includes all manufacturers, distributors and retailers of organic and inorganic chemicals, polymers, petrochemicals, dyes, paints, pigments and related industries. The industry is highly diversified with multiple sub-industries, each of which acts as a supplier or customer for the other to form an interconnected web. Primary suppliers include oil & gas manufacturers and refineries, mineral mining companies, laboratory equipment suppliers and plant equipment, manufacturers.

The industry is currently in its mature phase. All chemical industries are heavily regulated due to hazardous and toxic materials which require adequate health and safety measures. The organic chemicals industry has high barriers to entry while inorganic and petrochemical industries are slightly easier to break into. The chemicals industry is overall capital intense and is characterized by low to moderate competition due to multiple entry barriers. The industry depends on oil and gas prices, the Canadian effective exchange rate. Low oil & gas prices reduce operational overhead and increase profit margins.

A weaker Canadian dollar makes Canadian goods more competitive. Household spending drives demand for chemical products used for residential purposes such as cleaning compounds and paints. On the other hand, demand for industrial chemicals depends on economic growth, interest rates, and macroeconomic factors affecting corporate profits.

Industry Drivers

Sustainability

Discussions surrounding sustainability have been increasingly relevant in the economy, leading to changes in consumer demands and government regulations. Chemical manufacturing companies must find ways to adapt to these changes, which might involve reducing plastics use, decarbonizing production, etc.

Customer centricity

Companies are staying competitive by attempting to meet costumer’s every need and improve their experiences.

Technological innovations

In an increasingly digitized economy, industries are taking advantage of technological tools, and the chemical manufacturing industry is no exception. However, untapped potential remains in this industry, and integration of technology and data analytics into the supply chain – from distribution to production – can be expected.

Selling a Chemical Manufacturing Company

Companies in the chemicals industry find themselves at the center of scientific innovation, and as such, there are a few unique characteristics of this industry that must be considered when selling a chemical company. As Canada’s leading private market M&A Advisory firm, Beacon understands that selling a business is an important decision. A dedicated business owner not only seeks to extract maximum value from the sale of a business but also seeks to sell the business to a competent buyer who can continue the company’s legacy.

Beacon has worked on valuation and M&A advisory mandates in the chemical manufacturing industry, bringing extensive experience in deal negotiation to the table. Our experienced advisory team will assist your business in navigating the entire sell-side M&A process.

Capital intensity: This industry is generally capital intensive for a number of possible reasons, including product storage, machinery, and laboratory equipment.

High barrier to entry and low/moderate competition: Multiple entry barriers, including capital requirements, economies of scale, reliance on established supplier relationships, etc., have effectively reduced the size of competition that companies in this industry face.

Government regulations: all companies in the chemical industry are subject to government regulations due to the hazardous nature of chemical products.

Dependency on macroeconomic factors: the financial performance of chemical companies can be impacted by the oil and gas price, the Canadian effective exchange rate, and overall economy performance. Oil and gas prices have a direct impact on operational overhead costs and profit margins, whereas Canadian dollar value dictates the price competitiveness of Canadian goods. Lastly, a strong economy drives consumer demand for chemical products used for residential purposes.

With 40 years of combined experience serving businesses within Toronto, Ontario, and abroad, the Beacon transaction team has extensive knowledge and experience successfully working for several automotive companies from a variety of industries. Whether it be a valuation or sale, our team can provide expertise and resources found only at larger corporations, paired with the personalized touch of our M&A Advisory team. Contact us today to get in touch with one of our advisors.