My Scorecard post last week closed on a stub: M&A still finds a way. Not for every asset. Spec-driven, domestic supply, hard to copy. In contrast to what I was thinking about in March of this year, capital didn’t freeze following Hormuz; it just got pickier.
This is that continuation post…the so what…
Capital didn’t pause. It got a filter. The PE stats everyone quotes ($20B across 278 deals in 2021, roughly $5.9B in 2025, per C&EN citing S&P) aren’t a freeze. C&EN’s own read is that deal size fell more than deal count did. Look back about two years and the same filter shows up in four places on the value chain. Look forward 12 to 24 months, and I think it tells you where the activity will be.
Look back: four structures, one filter in each
1. Commodity: forced sellers, select buyers
Europe’s olefins and polyolefins weren’t waiting for a soft landing. High energy, regulatory and wage costs, Chinese capacity, soft auto and packaging demand. Sellers weren’t optimizing multiples. They were getting out.
LyondellBasell closed select European olefins and polyolefins into AEQUITA in May 2026 (now Velogy). SABIC agreed to sell its European Petrochemicals to AEQUITA at about $500M EV on roughly $3.5B of revenue, call it 0.14× sales, and sent its Engineering Thermoplastics package to Mutares at $450M EV, closed in August. Distressed industrial capital showed up. Strategic premiums didn’t.
This isn’t a growth story. It was buyers willing to take assets near asset value with the hope that they can run at a better cost base and live through the rationalization. Industrial consolidators and special-sits. Not peak-multiple strategics.
Filter rule: survival first. The opportunity is streamline, cost, rationalization, operating discipline. Growth multiples aren’t relevant here; think asset value, average cycle earnings and cash flow, and buyers with ability and desire to impact operations directly.
2. Process and intermediate: cleaning things up
Buyers and sellers didn’t abandon the middle of the chain. What moved were the pieces that helped the sellers tell a cleaner story (or an activist encouraged an action).
Johnson Matthey sold Catalyst Technologies to Honeywell for £1.325B, down from the £1.8B agreed a year earlier after the business underperformed. JM sheds process-tech complexity, Honeywell deepens the catalyst stack. Albemarle sold control of Ketjen to KPS and its Eurecat stake to Axens, about $670M combined, a lithium-cycle prune that keeps a minority. BASF closed a Coatings majority to Carlyle and QIA at €7.7B EV and sold Suvinil to Sherwin-Williams for $1.15B; BASF put the whole former division around 13× EBITDA. Ingevity sold its tall-oil refinery to exit CTO volatility. Arkema agreed to sell plastic additives to Praana. Synthomer carved William Blythe to H2.
True process integration still shows up too. Olin and Huntsman announced an all-stock merger of equals in June, chlorine into polyurethanes and epoxies, roughly $12.5B of combined sales. Shareholders approved in August. Close is targeted for the first half of 2027.
Filter rule: the seller wants clarity of story. The buyer wants efficiencies, adjacency, or a redeployment of sleepy story. Complexity that doesn’t serve the story sits; why act otherwise? Valuation paradigm is oddly historically “normal” if not sometimes “cheap”.
3. Specialty and fine: high-value, named themes
Specialty cleared when capital could name the theme and the switching costs were real. High-growth, high-margin, attractive end markets. Four themes carried the window, with a few others taking shape:
Electronic chemicals, including AI and semis. Element Solutions bought EFC at about 12× forecast 2026 EBITDA and Micromax from Celanese at about $500M, roughly 12.5×. Air Liquide paid €2.85B for DIG Airgas in Korea, 20× trailing, about 15× with backlog and synergies, for semiconductor, display, and battery gases. DuPont spun Qnity as a semiconductor pure-play. Process IP, customer quals, and fab adjacency hold the multiples. Electrical infrastructure runs on the same demand story (transformers, grid, data-center power).
Battery materials, as geo and replacement cost. Rio Tinto closed Arcadium Lithium for about $6.7B, a 90% premium, for Western lithium capacity and customer access. I Squared put about $800M of equity into ENTEK alongside up to $1.3B of DOE loan support for US separator capacity. AMG closed the remaining Zinnwald equity for EU critical-minerals consolidation. Buyers paid for qualified capacity and stickiness and anticipated demand.
Defense and critical materials. Michelin folded Tex-Tech into Polymer Composite Solutions this July, after Cooley and Flexitallic in the same defense-and-industrial composites lane. MP Materials’ partnership with the Department of Defense (convertible preferred, a separation loan, and a ten-year NdPr price floor) is the clearest critical-minerals processing print in the window.
Life-science and nutrition ingredients. IFF sold Pharma Solutions to Roquette at about 13× and closed in May 2025, then agreed to sell Food Ingredients to CVC at about 10×. dsm-firmenich sold its Feed Enzymes stake to Novonesis for €1.5B and closed, then agreed to sell Animal Nutrition & Health to CVC at about 7×. Excipients and enzymes clear high. Long quals, regulated customers, specific modalities / capabilities, book to bill balance, and margin (think absorbed costs vs empty capacity) are what got paid for.
India inbound sits underneath. Bain’s Novopor platform bolted on Pressure Chemical in the US. JSW closed Akzo Nobel India at roughly 25× per AkzoNobel. Anupam Rasayan bought Jayhawk Fine Chemicals from CABB. Arkema’s additives prune goes to an Indian buyer. Bankers and private companies are receiving India inbounds looking for US manufacturing presence. The same climate that pushes EU prunes onto the tape pulls capital into qualified sites…production moving towards India and its public market multiples.
Filter rule: named themes plus quals / market access plus high margins. End-market driver, differentiation, a technical or geographic moat. Valuations here remain elevated with many more buyers vs limited supply of opportunity. Strategics or PE-backed strategics are the dominant players here, with private equity reacting to whatever platform opportunities are left over.
4. Downstream from reaction: where PE is hunting
Downstream from reaction means the chemistry is already made. Formulation, specialty distribution, adhesives, water treatment, coatings applied rather than synthesized. Blending, coating, sealing, selling into a named end market. High margin, low capex, application know-how. As far from reactive and industrial chemistry as you can get and still be in chemicals; easier for the blue vest in NYC to understand and communicate to their IC.
This is where PE never left. The platform vintage is older (Solenis under Platinum, Univar under Apollo, Caldic under Advent). The last 24 months were hold, add-on, and selective new platforms. Solenis completed NCH. Pritzker took Buckman. Lindsay Goldberg took EMCO. Arsenal exited Seal for Life and ATP to Henkel. Henkel agreed to buy Stahl at about €2.1B EV.
On the medical side, H.B. Fuller’s offer for Advanced Medical Solutions prints at about 13× 2026 EBITDA pre-synergy, and its earlier GEM and Medifill package ran about 15.5×. Long clinician and device qualification cycles are the moat.
High multiples are still the rule when the book is clean and the end market is structural. PE specialty medians sit in the 12–14+× band.
Filter rule: end-market attractiveness, gross margin, technical differentiation in application know-how, depth of the technical team, qualification cycles (especially medical), and scale still clear high multiples here. Buyers are still trying to drive returns through consolidation, but nothing meeting attractive business criteria is cheap.
“Hung” platforms
Roughly 2015 through 2021, North American sponsors built several aggregation platforms. A lot of what was built remains hung now. Assets were aggregated around general themes but only loosely entangled. High-value buys sit next to weaker margin or weaker demand. Still good businesses, but many lack the firepower or duration to keep aggregating, can’t IPO at middle-market scale, and show noisy margin or supply chain. Hold periods are stretched (understatement). Prepare-to-sell density is rising.
M&A will come here…but not quite yet. I don’t see a real forcing function. Sponsor owners continue to wait for their businesses to grow (or recover) into a valuation that would motivate an action and will continue to wait until there’s an external driver (market, lender, LP, etc.). For them and their investors, it’s hard to find good assets at scale, so I’d rather manage the business I know than pay up or wait around for the next (not to mention the mgmt fee and upside optionality to wait).
I would suspect when these assets come there are three routes: a) sponsor-to-sponsor partnership with structuring (theme is go finish the roll-up we started and split the business up down the road); b) split up now, which means selling to strategic as step one and whatever is left over goes to sponsors to make anew (or you convince the strategic to take it all and divest later); or c) an unforeseen forcing function requires a relatively quick action / divestment (credit fund stops extending or LPs force a sale).
Look forward: the takeaway
Commodity stays active, and it stays EU-centric. A fair amount of activity, a small set of buyers who want to participate at asset value. AEQUITA-style and Mutares-style clears, not strategic premiums. Think asset value and an ambition to a post-rationalized cash flow.
Process and intermediate is cleanup. More motherships pruning for a cleaner story, more buyers running efficiencies or redeploying the asset. Valuation historically “normal”. Look for activist activity in public names.
Specialty clears on the really high-value stuff. High-growth, high-margin, attractive end markets: thermal materials, electronic chemicals with AI and semis behind them, defense and critical materials, life-science ingredients with a qual and demand cycle, India inbound for US presence. Valuation starts at 10 and goes up from there (or doesn’t clear).
Downstream from reaction stays PE’s hunting ground. Application expertise, high margin, low capex, away from the reactor and away from industrial chemistry as much as possible. There’s a race for scaled platforms or add-ons that fits within these aggregators. Valuation starts at 12 and goes up from there (unless margins and perception of valuable IP are absent).
Look familiar?
It should. It’s the two-speed economy I wrote about earlier, showing up on the deal tape. Capital is going to the fast lane: application, quals, named drivers. It’s an asset allocator and aggregator story. The slow lane clears at asset value or waits.
If you’re living this, challenge me. What do you see, and where do you see the market going?