M&A Valuations Maintain Healthy Levels as Strategic Interest Increases

Strategic buyers such as Evonik, PolyOne, and Schweitzer-Mauduit completed multiple high-profile acquisitions in 2016.

Thursday, March 16, 2017

After a record-setting 2015 in terms of M&A activity and valuations in specialty materials, these figures decreased slightly in 2016. Dealmaking in the industry, however, continued at a robust pace in 2016, as strategic buyers aggressively pursued companies with unique products and capabilities in attractive end-markets, such as the medical industry.

Valuations Recede Slightly From 2015’s Record Levels

M&A activity in the specialty materials industry has surged over the last several years. In addition to the long-term megatrends of lightweighting, conversion to advanced materials with high-performance capabilities, and continued compression of the cost differential between specialty and traditional materials, the attractive financial profiles of specialty materials companies have attracted growing interest from both strategic acquirers and financial sponsors.

In 2016 there were 241 completed acquisitions involving specialty materials companies totaling $38 billion. The median valuation for these transactions was 1.18x on an LTM revenue basis and 9.6x on an LTM EBITDA basis. While these valuations represent a slight decrease from 2015’s record levels, valuations remained very healthy for specialty materials companies, and 2016 saw many high-profile strategic transactions that resulted in robust valuations for the seller.

Highlights of This Report

We examine the trends that shaped M&A activity in specialty materials in 2016 and provide an in-depth look at the market for companies focused on sealants, coatings, and adhesives. Highlights include:

  • Valuations recede slightly from 2015’s record levels
  • Strategic acquirers become increasingly aggressive
  • Exposure to medical end-markets drives meaningful premiums
  • In-depth look at adhesives, coatings, and paints sector


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