Impacted by economic headwinds, the chemicals industry experienced a significant fall in the number of M&A transactions in 2022. As chemical companies come to terms with managing this on-going volatility, it is hopeful that 2023 will likely prove to be stronger year of transactions in the industry.
Despite a strong start to 2022 with 158 M&A transactions in the first quarter, the chemicals industry experienced a significant fall in M&A activity last year, with a 21% decrease in the number of global M&A transactions from the 10-year high experienced in 2021. As geopolitical uncertainty impacted the increase in energy prices, the industry battled the instability in demand and on-going supply chain disruptions, and consequently chemical companies began to adopt a more cautious M&A approach.
After a slower year in terms of M&A volumes, will the M&A momentum bounce back in 2023 or will the pace of M&A in the chemicals industry continue to slow? How will chemical companies plan to overcome potential headwinds and strategically position themselves for a bright, long-term future? Will the current economic outlook influence chemical executives to focus less on sustainability, ESG, and decarbonization goals in 2023? Will chemical executives turn to divestitures to allow them to continue to invest in growing more profitable parts of their business?
Deloitte surveyed 54 chemicals executives across sectors and geographies to assess current and future M&A plans. Despite the economic headwinds, 90% of the chemical executives surveyed were at least somewhat likely to undertake a merger or acquisition in 2023, emphasizing a positive outlook.
Our industry outlook collection, covering oil, gas, and chemicals; power, utilities, and renewables; and industrial products and construction, highlights the inflection points in the months ahead which could be critical to company planning.