Mergers & Acquisitions and Joint Ventures

Dampened product demand, price drops and an increase in competition has impacted the margins of many chemical companies. The drop in oil prices has helped some companies (for example, for naphtha-based petrochemical) and negatively impacted others (for example, for oil field chemical players). To sustain the high valuations in this environment, companies have pursued inorganic strategies.

M&A activity is also linked to strategic corporate transformations. Traditional conglomerates have adjusted portfolios and spun off business units to concentrate on high-yielding businesses. This in turn has created additional M&A activity both by the parent and the spun-off daughter company.

How to meet the objectives of such transaction strategies? It is essential to clearly define transaction goals as guidance for target selection but also for the whole transaction cycle. In addition, objectives are most likely achieved by completing a transaction with a sustainable integration or separation and following optimization.

The Pearsons Consulting Ltd service offering encompasses all phases of the M&A transaction cycle and include:

• Pre-merger analysis: potentials, synergies, costs
• Target selection: fit-gap analysis
• SWOT analysis
• Technical due diligence
• IT due diligence
• Post-merger integration
• Separation planning and execution
• Carve-out planning and execution
• Organizational change
• Process optimization
• Performance improvement
• Stabilization and synergies management
• Value chain harmonization
• Program and project management
• Risk management

Decisions on building a joint venture are often based on similar causes. Nevertheless, they require answers to specific questions, such as strategy conformance and partner selection. It is key to coordinate interests, expectations and credible assurance of commitment of all potential partners as well as developing a business model with clear role allocations. Potential deal breakers need to be identified while conducting negotiations about financial structure, allocation of profits, avoidance of knowledge drain and governance structure. The foundation of the joint venture and setup requires planning of relevant implementation milestones and joint definition of processes and decision rights for implementation and operation.

Pearsons Consulting Ltd successfully consults clients in M&A and joint venture projects based on these success factors:

• Our excellent industry and project expertise along different steps of the value chain enables us to identify the appropriate course of action exactly when and where needed
• Due to our diverse experience from many M&A projects, we possess a profound knowledge on validations and the implementation of transaction processes
• The inclusion of change management in M&A and joint venture projects, as well as the high social competencies of our professional consultants enable us to promote changes in a flexible and goal-oriented manner
• With our strong expertise in the area of process and transformation management, we successfully achieve the transaction goals and strategies of our clients
• We maintain close contact with relevant trade associations and economic institutions