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Why are specialty surfactants so special?

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NEIL BURNS

Neil A. Burns LLC

Member of H&PC Today Scientific Advisory Board

I have consulted periodically to the chemical industry since 1988 and throughout that over quarter-century, I have been asked regularly the question "what is a specialty chemical"? I still get, admittedly only occasional, laughs when I relate to boards and CEO's that a specialty business is one you have just acquired and a commodity business is one you have just divested. However, it is rare indeed to find a company boasting of its aggressive investment in commodity chemicals and its strategy to get away from involvement in specialties. No-one does that. Why not?

It's all about the money. Any investment banker will tell you that a specialty chemicals business is worth more, per dollar of earnings than a commodity businesses. That means, using the common metric of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) multiple, an acquirer of a chemical business will pay around a one third or more higher multiple if said business is fortunate enough to have been granted the appellation "specialty" by the financial community.  The table below using da ... ...




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