Client Success > M&A Advisory

Client Successes: M&A Advisory

Client Base

Client Type: Leading global private equity firm; one of the 10 largest

Issue:

The objective of this assignment was to provide the client with current and detailed insights and information regarding the selected manufacturing, competitor, and business aspects of the target’s amines business. With such knowledge, the client determined whether the target was sufficiently attractive to continue to progress this opportunity or if it should terminate its involvement

Approach

Working closely with the client’s internal team, Kline provided inputs into quantitative and qualitative evaluation of the relevant aspects of target’s business, such as drivers and trends in the end use markets, evolution of the value chain, development of the key cost components, competitive threats from China and the Middle East to its core markets, interviews with key industry participants etc.

According to our client, a key consideration was Kline’s chemical and our ability to quickly bring our global network of experts to bear on this assignment, which was an auction with a very aggressive final bid submission deadline


Kline Solution:

As a result of the insights developed by Kline, the client was better able to analyze the opportunities and threats facing the target’s business, and, ultimately, establish its value and bid

 

Client Type: Investment bank

Issue:

Our client was working with the developer of a greenfield re-refining project based on clean technology and needed Kline’s support preparing the Information Memorandum. Specifically, they needed a supply demand forecast for used PCMO, Group II base oil in North America, and a pricing model for the re-refinery’s feedstocks and products

Approach

Conducted primary and secondary research to estimate and forecast amount of PCMO that is consumed in various applications once it has been used in a automobile.

Using Kline’s pricing model, we delivered a regression analysis of historical feed stock prices versus No.6 Fuel Oil and Natural Gas prices, and historical Group II/II+ base oil prices versus historical WTI prices


Kline Solution:

As a result of the insights developed by Kline, our client was able to pressure test the profitability of the re-refinery based on the price of crude oil, allowing them to illustrate the potential profitability and attractiveness of this project to prospective investors

 

Client Type: Leading middle-market private equity firm

Issue:

Client involved in an auction and needed Kline’s support to better understand specific manufacturing cost and raw material supply/demand issues within a very short time frame

Approach

Using Kline’s knowledge and focused primary research with competitors, in conjunction with information provided by target and secondary research on the target and its business, we provided our client with the needed understanding of the relative manufacturing costs of the target and that of three key North American competitors

Kline Solution:

Based on our efforts and what we delivered, our client had a accurate and objective understanding the target and its competitive position allowing it to develop a realistic valuation and bid

 

Client Type: Global leader in inorganic chemicals, minerals, and catalysts

Issue:

Our client’s vision included expansion into the value-added segments of its current markets to drive growth and enhance financial performance

Approach

We identified potential areas of revenue growth in specialty chemicals where value is delivered through a combination of naturally derived chemicals and delivery system technology. We assisted our client in understanding the business, which was much different than its core, identifying and evaluating potential acquisition candidates, and progressively ranking and prioritizing the candidates to identify the most attractive targets

Kline Solution:

Based on our collaboration, we recommended a short list of targets, two of which were acquired by our client. Post close, we successfully supported our client in identifying and recruiting core personnel who were important to the successful integration of both firms, including a general manager to run the new business

 

Client Type: Global supplier of chemicals

Issue:

On two different occasions, our client was challenged to more aggressively grow its business. One case was focused on diversification into value-added markets, while the other was a geographic expansion. In both cases, our client sought to leverage its technological leadership

Approach

In both engagements, we developed an up-to-date perspective on the targeted markets – one was an application, and the other geographic. We provided detailed understandings of the competitive landscape to allow our client to understand what challenges would be encountered and to initially populate a pool of acquisition candidates, which were systematically vetted

Kline Solution:

Our analyses were used to expand our client’s position in the target where they still look for acquisitions; while the second assignment is still in progress

 

Client Type: Mega Major’s Lubricants Business

Issue:

Client wanted to divest lubricants assets in Central and Eastern Europe (CEE) and needed help in finding interested buyers and with elements of deal preparation

Approach

We generated a long list of potential buyers, contacted each, and progressed them through the stages of the M&A process while assessing their interest and fit. We worked with the client to create an IM that detailed the assets for sale, as well as an industry overview of the lubricant market in CEE. Additionally, we identified comparables to help guide our client in their valuation exercise

Kline Solution:

Through direct contact with and our assessment of the interest of potential buyers, we progressed to a culled list of 10 interested parties willing to proceed to due diligence. Our client was much better prepared for the subsequent stages of the process due to the guidance we provided on potential buyers and market comparables, as well as in supporting construction of the IM. In the end, the client decided to postpone the asset sale

 

Client Type: Leading global consumer goods company

Issue:

Our client was interested in capitalizing on trends towards health and natural lifestyles and wanted to understand the development potential of one of the emerging equities in natural personal care that was available for acquisition

Approach

Kline provided a thorough assessment of the natural personal care market, evaluating its growth potential and retailer commitment to the category. We appraised the target candidate relative to other natural brand and emerging companies, considering its competitive strengths and “sustainability” of its market position.

Kline Solution:

As a result of the insights developed by Kline, our client was provided with a robust assessment of the natural ingredient market and validation of the credibility of the target candidate. While this target candidate ultimately was not acquired by our client due to greater value placed on the acquisition by a competitive firm, it did ultimately proceed with another acquisition in the natural space that offered a greater fit and leverage to the firm.

 

Client Type: Major worldwide biotechnology company

Issue:

Our client asked us to identify opportunities for which its core competencies in biocatalysis and metabolic pathway engineering would allow the establishment of a globally sustainable competitive advantage

Approach

We screened numerous segments of the custom, fine, and specialty chemical industries to identify the most attractive segments and products, which as a group would generate revenues of between $100 million and $150 million. We subsequently identified several subsegment and product-specific opportunities that would satisfy our client’s growth, revenue, and profitability criteria

Kline Solution:

Our findings were consolidated into the client’s business plan. They successfully pursued several opportunities for commercialization, including JVs and acquisitions, and established a viable, commercial enterprise in fine chemicals

 

Client Type: Global leader in chemicals and elastomers

Issue:

Our client was considering a €400 million bid for a chemical company, but asked us to provide due diligence before they submitted a binding offer

Approach

The client had received all of the standard documentation from the seller and their bank, but was concerned about some points that were not covered in detail, including strategic raw materials and the situation in China. We identified and interviewed senior executives familiar with this business across several regions who were able to give critical and current insights into these key issues

Kline Solution:

We found that for historical reasons the target’s a price for its key raw material that was well below the current market price in the United States. As derivative sales prices are calculated on world price plus, the target was enjoying excellent, “windfall” margins. Further research determined the contract was to end within a year which would adversely affect margins and competitiveness. We also uncovered plans by a major customer to build its own plant in China. These “red flags” made our client reconsider its interest and investment, and they decided to exit the bidding process

 

Client Type: U.S. independent lubricants manufacturer

Issue:

After collaborating on a business plan, the client and Kline realized there was potential value in divesting the company and seeking new ownership to help it realize their growth plans

Approach

Kline identified and characterized potential buyers, prepared and executed confidentiality agreements, developed the confidential information memorandum and teaser documents, and facilitated the opening stages of the divestiture process

Kline Solution:

As a result, five bidders were identified for the divestiture, and the client was prepared to proceed to issuance of the confidential information memorandum and due diligence process

 

Client Type: Global technology and equipment company

Issue:

Our client’s vision for 2020 included new business to contribute an estimated 20% of the company’s revenue in 10 years

Approach

We identified an opportunity in packaged chemical plants—where technology value is delivered with proprietary equipment—as a potential area of growth. We assisted our client in identifying and characterizing selected industry segments where process technology is delivered to the customer as an equipment package, with value embodied in the form of engineering, operations know-how, cost reduction for customer, and other value proposition. For the most attractive opportunities, we further assessed suppliers, customer bases, and value proposition for supply of packaged plants

Kline Solution:

Based on our evaluation, we recommended a target list of new business segments for revenue growth together with a list of acquisition candidates for each new segment