Post on 21-Mar-2018
transcript
Grace Matthews
Overview of Capabilities & Market Update
Grace Matthews Update
2
▪ 100% dedicated to chemicals &
materials M&A
▪ 23 closed M&A transactions since
2015
16 completed sell-side
transactions
7 completed buy-side
transactions
▪ 15 transactions involving a strategic
buyer
▪ 9 carve-out transactions
▪ 4 cross-border transactions
Grace Matthews has successfully completed 23 chemicals transactions since the beginning of 2015
Summary Statistics Select Transactions
Grace Matthews, Inc. advised
United Paint
has sold its global automotive
interior rigid thermoplastics
coatings business to
a division of
has been acquired by
Grace Matthews, Inc. advised CASS
Polymers and Shoreview Industries
Grace Matthews, Inc. advised
3M Company
has sold its pressurized
polyurethane foam adhesives
business to
Grace Matthews, Inc. advised
BASF
has sold its global Polyolefin
Catalysts business to
Grace Matthews, Inc. advised
Americhem Group
has acquired
Grace Matthews, Inc. advised
Ennis-Flint
has been acquired by
Grace Matthews, Inc. advised
California Products Corporation
has sold its portfolio company
to
Grace Matthews, Inc. advised
W.F. Taylor Co.
has been recapitalized by
Grace Matthews, Inc. advised
Compass Chemical International
has been acquired by
Grace Matthews, Inc. advised
TPC Group
has sold its
Baytown Operations to
Grace Matthews, Inc. advised
Henry Company
has been acquired by
Grace Matthews, Inc. advised
Jones-Blair Company
has been acquired by
Grace Matthews, Inc. advised
CiDRA Holdings, LLC
has sold its subsidiary
CiDRA Chemical Management,
Inc. (CCMI) it
Grace Matthews, Inc. advised
ICP Group
has acquired
Grace Matthews, Inc. advised
Aakash Chemicals
has been recapitalized by
Grace Matthews, Inc. advised
Buckman Laboratories
has sold select Canadian
assets to
Grace Matthews, Inc. advised
Applied Adhesives
has been acquired byhas been recapitalized by
Grace Matthews, Inc. advised
MFG Chemical, Inc.
Overview of Grace Matthews
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▪ 14 investment professionals focused entirely on the chemicals and materials value chain and have
approximately 150 years of combined experience
▪ Strong continuity from low employee turnover
▪ More than 100 chemicals and materials transactions completed
▪ Proven track record in closing highly complex deals
▪ The majority of our transactions require us to navigate through issues such as legacy environmental
matters, unions, pension liabilities, and FCPA/trade compliance
▪ Global access – Grace Matthews has direct relationships with leading chemicals and materials
companies and private equity firms
▪ Human capital – Grace Matthews employs finance professionals with engineering, chemistry, and
materials science degrees who have operations and business development experience
▪ Recognized as independent industry experts, with services including:
Business sales – strategic and
private equity
Corporate divestitures
Going-private transactions
Acquisitions
Capital raises
Fairness opinions and
valuations
Recapitalizations and
management buy-outs
Strategic alternatives analysis
Transaction Breakdown
Sell-Side65%
Buy-Side20%
Recapitalizations / Other, 10%
Fairness Opinions / Strategic Alternatives
5%
Strategic vs. Financial Buyers
80% of GM sell-side clients were acquired by strategic buyers
Strategic80%
Private Equity20%
Grace Matthews focuses on providing the best options and alternatives for our clients
Deep Chemical Industry Expertise Across The Chemical Value Chain
Agricultural
Chemicals
Adhesives,
Sealants & Tapes
Colorants & Additives
Construction
Materials Contract Packaging
Food Ingredients,
Flavors & Fragrances
Lubricants & Lube
Additives
Paint, Industrial
Coatings & Inks
Plastics, Polymers
& Resins
Fine & Organic
Chemicals
Inorganics, Ceramics &
Catalysts
Oilfield & Water
Treatment Chemicals
Personal Care,
Soaps & Cleaners
Petrochemical /
Commodity Chemicals
Industry Relationships
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Global Capabilities
▪ Nearly all of our sell-side processes include potential buyers from outside
the U.S.
▪ We cultivate direct ties to senior management around the world, who
respect us for our industry expertise and deal flow. They also often hire us
for their divestitures
▪ GM principals visit European clients on a regular basis
▪ Approximately 70% of our deals in the last three years involved significant
interaction with global, non-U.S. strategic buyers
▪ Approximately one-third of our deals in the last three years were cross-
border
Established Relationships with Industry Leaders
▪ GM principals have completed assignments with all below
▪ Direct ties to hundreds of other global and regional chemical companies
Select Chemical Value Chain Transactions
Grace Matthews, Inc. advised
Applied Adhesives
has been acquired by
5
has been recapitalized by
Grace Matthews, Inc. advised
MFG Chemical, Inc.
Grace Matthews Team
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John Beagle | Co-founder, Managing Director
Chemical Team Lead
Former research engineer at Digital Equipment
Corporation
MBA from Cornell University, B.S. in Materials
Science from Cornell University
25+ years relevant experience
Kevin Yttre | Managing Director
Formerly with ICI’s Uniqema specialty chemicals
business in U.S. and The Netherlands
MBA from Harvard Business School, B.S. in
Chemical Engineering from University of
Wisconsin-Madison
10+ years relevant experience
Ben Scharff | Managing Director
Advises clients in chemicals, paints and coatings,
construction products and services, and general
manufacturing sectors
BS from University of Wisconsin-Madison and
previously served in the United States Marine Corps
20+ years relevant experience
Thomas Osborne | Senior Advisor
Former CEO of both The Tnemec Company and
ICI Paints North America / The Glidden Company
BS from Youngstown State University, and has
completed the Advanced Management Program at
Harvard Business School
30+ years relevant experience
Andy Hinz | Managing Director
Former Equity Research Analyst at Robert W.
Baird & Co.
MBA from Northwestern University and BBA from
University of Wisconsin-Eau Claire; holds the CFA
designation
10+ years relevant experience
Andrew Cardona | Vice President
Former Investment Associate at Prudential Capital
Group, working in both the international group and
the restructuring group
BBA from the University of Wisconsin-Madison
8 years relevant experience
Eric Sabelhaus | Senior Associate
Former Investment Banking Associate at Robert
W. Baird and mechanical engineer at GE Energy
MBA from the University of Chicago (Booth), MS
and BS in Mechanical Engineering from Georgia
Tech and Notre Dame, respectively
7 years of relevant experience
Doug Mitman | Co-founder, Managing Director
Former Trader for Fidelity Investments and Market
Maker at the American Stock Exchange in New
York
MBA from Cornell University and BA from
Dartmouth College
25+ years relevant experience
Sarah Toledano | Analyst
Supports clients in a variety of chemical and
materials industries
BS in Chemistry from Massachusetts Institute of
Technology (MIT)
3 years relevant experience
Jon Glapa | Senior Associate
Supports clients in colorants, coatings, adhesives,
organic materials, and plastics industries
MBA from the University of Chicago (Booth), BA in
Mathematics with Secondary Field degree in
Economics from Harvard University
5 years relevant experience
Christopher Hayes | Analyst
Supports clients in a variety of chemical and
materials industries
BS in Mechanical Engineering from the University
of Alabama
Joined Grace Matthews in 2016
Employee Highlights:
▪ 7 – employees with STEM (Science, Technology, Engineering, Mathematics) degrees
▪ 7 – personnel with MBAs from leading business programs
▪ 150+ years of combined relevant experience
▪ 100+ deals completed
Kevin Ngo | Analyst
Experienced in M&A, ESOPs, structured
finance, debt and equity financing projects, and
energy and commodity development markets
BBA in Finance from the University of
Oklahoma, with a minor in Chinese
Joined Grace Matthews in 2017
Matthew Stouder | Analyst
Supports clients across the chemical and
materials value chain
MS in Finance and a BA in Chemistry (Magna
cum Laude) from Texas A&M University.
Joined Grace Matthews in 2017
Grace Matthews Chemicals Index
Note: The Grace Matthews Chemical Index is comprised of 98 publicly-traded chemical companies, spanning multiple markets, geographies, and company sizes.
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17
Low: 5.2x
February 2009
Current: 11.7x
(all-time high)
10Y Avg. Multiple: 9.5x
▪ Since 2015, multiples have trended upwards
across nearly all chemical sub-sectors that GM
tracks
▪ Top sectors by value:
▪ F&F: 16.8x
▪ Agriculture: 13.9x
▪ Adhesives: 13.9x
▪ Distribution: 13.7x
13.9x 13.9x
10.6x
8.9x8.3x
13.7x
8.7x
16.8x
10.4x11.0x
12.0x
9.0x
11.8x12.4x 12.3x
0.0x
5.0x
10.0x
15.0x
20.0x Dec-15 Oct-16 Jan-17 Apr-17 Current
Public Trading EBITDA Multiples by Sector
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M&A Drivers and Valuation
Strategic Buyers
▪ Strategic buyers are cash-rich and pushing acquisitive growth initiatives, keepingvaluations elevated
▪ The credit markets are extremely aggressive, contributing to increased corporate accessto debt capital
▪ Operating in an environment where organic growth is uncertain due to macro risk and lowcommodity prices
Private Equity
▪ Debt and equity capital is readily available; driving LBO valuations higher
▪ At the end of Q2-2017, global dry powder reached a record high of $906 billion (1)
▪ High-quality companies are commanding very healthy premiums, but valuations remaindriven by “baseline prices” derived from lending capabilities
Select Public Company from the GM Chemical Index
4.5x5.2x
4.5x5.4x 5.2x
5.7x 5.4x5.9x
0.0x
2.0x
4.0x
6.0x
8.0x
2010 2011 2012 2013 2014 2015 2016 2017 (H1)
Median Historical Debt / EBITDA Multiples (2)
_____________________
1. Preqin, Q2 2017 Private Equity update.
2. Pitchbook, U.S. private equity breakdown. Data includes private equity and strategic buyer transactions.
Net Debt / TEV / TEV /
Company EBITDA LTM Revenue LTM EBITDA
3M 1.0x 4.3x 15.3x
Air Products 0.2x 3.3x 9.9x
Akzo Nobel 0.9x 1.5x 9.8x
Albemarle 1.0x 4.8x 16.8x
Ashland 3.2x 1.2x 8.4x
BASF 1.4x 1.5x 7.9x
Clariant 2.0x 1.5x 10.2x
Dow 1.7x 1.8x 9.8x
Eastman 3.1x 2.1x 8.8x
Ecolab 2.6x 3.4x 15.7x
FMC Corp 2.4x 3.9x 18.4x
HB Fuller 2.6x 1.5x 11.7x
Innospec 1.4x 1.4x 10.2x
Kemira 2.8x 1.0x 8.6x
PolyOne 2.9x 1.2x 9.9x
RPM 2.8x 1.7x 12.9x
Sensient 2.4x 2.8x 15.1x
Wacker Chemie 0.7x 1.1x 5.8x
W.R. Grace 3.9x 3.7x 15.4x
Summary Statistics
Mean 2.0x 2.3x 11.6x
Median 2.4x 1.7x 10.2x
High 3.9x 4.8x 18.4x
Low 0.2x 1.0x 5.8x
Strong corporate balance sheets and ease of access to credit for buyers have created favorable market conditions.
8
833 East Michigan Street, Suite 1420
Milwaukee, WI 53202
414.278.1120
www.gracematthews.com
© 2017 Grace Matthews, Inc. All rights reserved. Securities are offered through GM Securities, LLC, under common control with Grace Matthews, Inc., and a registered broker dealer and member of the Financial Industry Regulatory Authority.