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M&A–Boom in Chemicals

Takeover Trends: Why 2016 is the Year of M&A for the Chemical Industry

| Editor: Dominik Stephan

Trend No. 2: “Buy and Build” Strategy

With a “Buy and Build” strategy, businesses are specifically acquired over a longer period of time in order to reach a leading position in a defined market segment. In this case, a suitable business model plays an important role. A “Buy and Build” strategy is frequently followed by mostly new companies or sub-groups. Merck Life Science exemplifies the fact that an acquisition is no longer a once-off action. Over a longer period of time, Merck has specifically strengthened in this segment through larger and equally focussed take-overs. This course is now continued with the take-over of Sigma-Aldrich.

Trend No. 3: “Best of both worlds“ – The Race for the Best Solution

The traditional merger, during which the purchasing company leaves its mark on the purchased one, is no longer sustainable. Best practices are already specified in both companies and used as “blueprint” for integration during the preliminary stages of successful takeovers. In future, those companies taking into consideration the “best of both worlds” principle will also be the most successful. This considerably reduces the challenges faced by Change Management and the affiliation of the employees.

Trend No. 4: “Think customer” – Before and After the Takeover

An acquisition burdens the internal organisations and can therefore have a negative impact on the development of customer and market relations. It is frequently observed that, before and even after integration, the focus is unduly placed on internal topics such as organisation and standardisation. A stronger focus on the customer, starting with the selection of takeover objectives to way past operative integration, ensures that the existing business is developed and new market potentials are realised throughout the entire acquisition process.

“Additionally important success factors for M&As are the early setup of a transformation program, a precise target image from a market and customer perspective, as well as proactive program control and Change Management,” adds Ferhat Eryurt, Head of the Chemical Markets & Strategy Competence Centre at Camelot.

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