Chris Cerimele - Managing Partner, Balmoral Advisors

Chris Cerimele

Managing Partner

Chris Cerimele

Managing Partner

Adjusted Expectations

Following the challenging year of 2022, numerous industry experts, economists, and key players in the chemicals sector had initially predicted a rebound in production, increased M&A activity, and overall improved economic conditions for 2023.

Contrary to initial expectations, 2023 did not meet projections, prompting widespread revisions of quarterly estimates by chemical companies for the latter half of the year.[1]

Deal value and volume in the Chemicals industry during 2023 also remained subdued, primarily due to an extended cycle of rising interest rates, heightened global conflicts, and concerns about higher interest rates. In Q4 2023, the global sector experienced a modest uptick with a total of 119 disclosed M&A deals, marking an increase from the 102 deals recorded in the previous quarter. However, average disclosed valuations were softer at $9B, trending lower than in the previous two quarters.

Macro-Economic Outlook: Improved Market Conditions

The United States, steering clear of a recession, displayed signs of a ‘soft landing’, although economic growth rates are projected to taper off. Inflation has still not met the Fed’s 2% goal, but the markets are predicting rate cuts in 2024. This could have a positive impact on deal activity by reducing borrowing costs.

There is reason for optimism for the U.S. Chemicals industry in 2024. A notable shift is the reduction in chemical imports, signaling a more self-reliant strategy. The destocking trend initiated in the second half of 2022 was largely resolved by 2023.[2] This, combined with growing manufacturing orders and reduced input costs in the Chemicals and Plastics sectors, sets the stage for ramping up production and capitalizing on escalating demand.

Public Chemical Company Performance: Contrasting Regional Dynamics

The U.S. Chemicals Distribution sector has outperformed the S&P 500, demonstrating resilience and potential for growth. The share prices of various chemical companies have started to trend upward indicating investor optimism for the industry’s future.

Current Challenges and Positive Future Outlook

  • Mega Deals Scarce: Few large deals concluded in Q4 2023. The bulk of Q4 M&A activities centered around the middle market.
  • Europe’s Deal Downturn: Ongoing conflicts in the Middle East and the Russia-Ukraine war further contributed to a decrease in international deal activity. European deals have been the lowest in Q4 2023 due to margin pressure from significant increases in feedstock costs caused by supply chain disruptions.
  • Expected Surge in Deals amid Rising Energy Prices: The elevated energy prices have motivated financially robust national oil companies (NOCs) in the Middle East to actively seek downstream chemical assets. Their emphasis is on sustainability considerations and navigating the energy transition.[3]
  • Chemical manufacturers are increasingly recognizing the benefits of vertical integration, with a growing trend towards investments in downstream integration. This strategic move allows companies to broaden their product offerings towards high-growth, high-margin products, or gain technology through M&A.[4]

Upbeat 2024 Outlook

The trend for 2024 is forecasted to be transitory as more and more companies convert to “greener” standards. A large section of manufacturers rely on the Chemicals industry for inputs, which produces an opportunity for sustainable manufacturers. Chemicals industry leaders are poised to exploit the potential of a circular economy, with chemical recycling emerging as a key concept.[1]

The M&A outlook for 2024 is brightening. The aging of private equity (PE) portfolio companies is expected to bring more attractive assets to the market in early 2024. Companies may seize this opportunity to engage in transformative deals, consolidate market positions, and capitalize on synergies and economies of scale. Simultaneously, divestiture of non-core assets for portfolio optimization, scrutiny of supply chains, and the increasing pressure on companies to decarbonize and fulfill sustainability obligations are fundamental themes expected to drive M&A in the short term.[3]

Let’s Talk

To explore the latest developments in the sector’s M&A landscape, share updates about your business, or discover our comprehensive advisory services and in-depth expertise in the Chemicals and Materials industry, please give us a call.



  1. Deloitte
  2. American Chemistry Council
  3. PWC
  4. Elsevier 


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