NEW YORK, NY, USA, 29 March 2021— Deloitte Global’s 2021 Chemical Industry Mergers and Acquisitions Outlook (2021 Outlook) anticipates mergers and acquisitions (M&A) activity will be an important growth mechanism as chemical companies recover and look to grow in 2021. While the COVID-19 pandemic spurred a decline in M&A activity and uncertainty for the broader economic environment, there are signs for optimism in these early months of 2021.
This year’s outlook notably includes the results of Deloitte Global’s inaugural Chemical M&A Survey, which assessed sentiments from chemical executives regarding the M&A market and their company priorities. The survey polled 35 chemical company executives across sectors and geographies between September 10 and November 3, 2020, revealing early unanimous positivity in the M&A outlook for 2021. While these responses send a clear signal that acquisitions will be a focus in 2021, executives are also expected to prioritize organic growth and digitization efforts.
“The chemical industry was certainly not immune to the impact of the COVID-19 pandemic, however, there is an overwhelming positive M&A outlook for 2021 from chemical executives,” says Deloitte Global Energy, Resources & Industrials Financial Advisory leader Dan Schweller. “Deloitte expects this optimistic mindset to continue as the industry looks to focus on making sustainable investments in the years ahead.”
One trend the 2021 Outlook sees shaping the M&A landscape is the heightened focus on transactions, alliances, and initiatives that align with the recent uptick in sustainability commitments and recognize the importance of Environmental, Social and Governance (ESG) to investors. Companies can also expect additional due diligence in M&A transactions focused on the carbon footprint and sustainability practices of potential transaction partners.
Despite decreases in deal volume over the past several years, many of the roadblocks that slowed deal-making are starting to resolve. Since many governments allowed companies in the chemical industry to remain open throughout the pandemic, executives have gained a better understanding of how the COVID-19 environment will impact the market and their forecasts. Private equity and other financial investors will continue to remain a crucial factor in this industry. The outlook in 2021 remains optimistic, especially as the total volume of transactions in the last four months of 2020 exceeded that from 2019.
“The rollout of COVID-19 vaccines and a strong back half of 2020 in total volume of transactions points to a promising future for the chemical industry,” says Deloitte US Chemical M&A leader Philip Hueber. “It is very possible the M&A market could return to pre-2020 levels in 2021 if broader economic recovery from the pandemic continues.”
The following are snapshots of M&A activity by geography, as outlined in the 2021 Outlook: