Why are Private Equity Firms Acquiring Chemical Distributors Worldwide?

Bee, TK; Chelliah, J

Why are Private Equity Firms Acquiring Chemical Distributors Worldwide?

Bee, TK Chelliah, J

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Publisher:: JIMS Journal
Publication Type:: Journal Article
Citation:: Journal of International Management Studies, 2013, 8 (1), pp. 108 - 113
Issue Date:: 2013-01

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Field	Value	Language
dc.contributor.author	Bee, TK	en_US
dc.contributor.author	Chelliah, J https://orcid.org/0000-0003-2351-3784	en_US
dc.date.issued	2013-01	en_US
dc.identifier.citation	Journal of International Management Studies, 2013, 8 (1), pp. 108 - 113	en_US
dc.identifier.issn	1993-1034	en_US
dc.identifier.uri	http://hdl.handle.net/10453/29655
dc.description.abstract	Private equity firms (PEFs) in recent times have been busy in acquiring chemical distribution companies worldwide. This paper examines both the drivers and strategies deployed in relation to these acquisitions. The paper concludes with a prognosis of future strategic options available to PEFs within the global chemical industry. This article is an opinion piece based on current and recent trends. It is evident that PEFs are acquiring chemical distribution businesses as a result of the opportunities arising from the fragmented nature of the industry. PEFs are able to acquire and consolidate the operations of these fragmented chemical distribution companies through actively participating in the management of these companies thereby creating efficiencies through integration and economies of scale. This allows PEFs leverage far greater value than their original investment in these acquired companies and thereby make significant returns on exit usually through IPOs. However, as greater disintermediation takes place in the industry chemical distributors may have to reinvent themselves as `pseudo manufacturers to stay in business in order to remain attractive to investors including PEFs. There is a dearth of concise analyses on the value of acquisitions in the global chemical industry by PEFs in practitioner literature. This article makes a worthy contribution in this respect by cogently charting PEFs strategies both past and present together with a prediction for the future.	en_US
dc.publisher	JIMS Journal	en_US
dc.relation.ispartof	Journal of International Management Studies	en_US
dc.title	Why are Private Equity Firms Acquiring Chemical Distributors Worldwide?	en_US
dc.type	Journal Article
utslib.citation.volume	1	en_US
utslib.citation.volume	8	en_US
utslib.for	150309 Logistics and Supply Chain Management	en_US
utslib.for	1503 Business and Management	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
utslib.copyright.status	closed_access
pubs.consider-herdc	true	en_US
pubs.issue	1	en_US
pubs.volume	8	en_US

Abstract:

Private equity firms (PEFs) in recent times have been busy in acquiring chemical distribution companies worldwide. This paper examines both the drivers and strategies deployed in relation to these acquisitions. The paper concludes with a prognosis of future strategic options available to PEFs within the global chemical industry. This article is an opinion piece based on current and recent trends. It is evident that PEFs are acquiring chemical distribution businesses as a result of the opportunities arising from the fragmented nature of the industry. PEFs are able to acquire and consolidate the operations of these fragmented chemical distribution companies through actively participating in the management of these companies thereby creating efficiencies through integration and economies of scale. This allows PEFs leverage far greater value than their original investment in these acquired companies and thereby make significant returns on exit usually through IPOs. However, as greater disintermediation takes place in the industry chemical distributors may have to reinvent themselves as `pseudo manufacturers to stay in business in order to remain attractive to investors including PEFs. There is a dearth of concise analyses on the value of acquisitions in the global chemical industry by PEFs in practitioner literature. This article makes a worthy contribution in this respect by cogently charting PEFs strategies both past and present together with a prediction for the future.

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http://hdl.handle.net/10453/29655