Manufacturing, Industrial & Distribution · Buyer guide
Buying a Chemical & Specialty Product Manufacturer business
Published · Reviewed by The Diligence Standard Team · Updated
a Chemical & Specialty Product Manufacturer can look attractive on headline earnings while asset condition, regulation, customer behavior, inventory, people or owner dependence materially change what the buyer actually owns.
How the business works
Formula/IP, raw-material sourcing, batch yield, environmental/safety compliance, customer concentration, plant condition and working capital determine value.
Risks to test
- Environmental/safety liability
- Raw-material concentration
- Formula/IP ownership
- Plant/equipment CapEx
- Customer concentration
- Inventory/hazardous-material controls
Evidence to request and reconcile
- Product/formula/IP files
- Batch/yield records
- Environmental/safety records
- Customer/product margins
- Supplier purchases
- Plant/equipment maintenance
Decision questions
- What environmental/safety obligations exist?
- Who owns formulations/IP?
- Which raw materials are single-source?
- What plant CapEx is coming?
- What customers/products create profit?