Acquisition support - industrial products

Leading chemical process technology and catalyst supplier seeking to expand presence in refinery and petrochemical technologies

Key questions

• What is the outlook for demand for the refinery and petrochemical products manufactured using the target’s technologies, and therefore the prospects for ongoing capacity expansion?
  
  
• How strong and sustainable is the target’s competitive position in the supply of these technologies?
  
  
• What level of revenue growth should be factored into the business plan and valuation of the target?

Approach

• IAMCO began by analysing qualitative and quantitative market data to understand historical market growth and technology supplier market shares in a range of petroleum and petrochemical product categories, and then forecast future growth in these categories in terms of demand and likely capacity additions. The core of our work was then to conduct a programme of in-depth interviews with the target’s competitors (process technology licensors) and customers (oil refineries and petrochemical plants), to gain insight into the target’s competitive position and refine market forecasts.

Findings

• The target’s position in refinery process technology appeared strong, founded on growing demand and increasingly stringent emissions regulations, and benefiting from a strong reputation among customers.

• In petrochemical process technology, the outlook was also deemed to be favourable, given the target’s ownership of a number of winning technologies.

• In both cases demand was forecast to slow, but the target’s business plans adequately reflected this fact.

Recommendations

• The target’s business appeared generally sound and the technologies in its portfolio attractive to our client. The acquisition case was therefore supported, at an appropriate price reflecting the forecast weakening market conditions.