Alexander Comanita is an Associate at MarketChemica & Assoc. with expertise in financial analysis, strategic marketing, and deal origination. Alexander has worked across various roles in market research, data analysis, go-to-market strategy, M&A origination and execution. He works closely with MCHA’s private equity partners and continues to play an important role in deal origination and support. Alexander holds a finance degree from York University and is based in Toronto, Canada.

Julien Meissonnier is a Partner at MarketChemica & Assoc. with extensive experience in business development, consulting, and strategic advisory roles. Julien spent 10 years in engineered plastics and composites with Rhone-Poulenc and Ciba-Geigy in France. Over the past 25 years, he has been active in Israel’s start-up ecosystem, building strategic partnerships with Fortune 500 firms, facilitating IPOs in addition to raising capital from VCs and institutional investors. He holds an engineering degree in Physics of Materials from INSA de Lyon, an MSE in Engineering from the University of Washington and an MBA from INSEAD.

Abstract

European fine & specialty chemical manufacturers are struggling with input cost increases, supply-chain disruptions and decreased access to traditional debt-financing. These factors have pushed many Small-Medium sized Enterprises (SMEs) – defined as firms from 5-50MM€ in sales – into financial distress. This article explains how partnering with an M&A Advisor can help distressed businesses identify inorganic methods of stabilizing a firm’s financial position, including Distressed & Special Operations Funds (DSOP), Distressed Debt Funds (DDF) and others.

Introduction

Traditionally viewed as some of the most resilient businesses, fine & specialty chemical manufacturers in Europe are facing an unprecedented financial squeeze. Recent geopolitical turmoil and inflation (both structural and policy-driven) have led to some of the highest EU energy prices on record. In addition to this, supply-chain disruptions have further delayed critical raw materials, lengthening cash-conversion cycles and increasing working capital demands.

This “perfect storm” of increased costs has pushed more SMEs towards financial distress and catalyzed a growth in demand for insolvency risk-management services. To illustrate this phenomenon, Figure 1 shows how governmental support decreased German SME insolvencies in 2021 prior to a steady increase in bankruptcies over subsequent years (1).

Contrary to their larger counterparts, distressed SMEs are more restricted in their access to liquidity and debt-instruments. With less available options and a decreased capacity to carry existing debt in this high-interest environment, identifying the right type of financial sponsor may be the ...