The Valence Group Global Chemicals M&A Conference
Wednesday, 14 September 2016 | US CCMP exec explains keys to successful M&A | Joe Chang | ICIS Chemical News
NEW YORK (ICIS)–Persistence and creativity in deal structures are some of the keys to successful mergers and acquisitions (M&A), a private equity executive said on Wednesday.
“Creativity in options and deal structures creates value, and having many exploratory conversations is important” even if nothing immediately materialises, said Bob Toth, managing director of private equity firm CCMP Capital and former CEO of US-based filtration company Polypore.
Toth spoke at The Valence Group Chemicals M&A Conference in New York.
Polypore’s eventual sale to US-based 3M and Japan’s Asahi Kasei in two linked deals started with an exploratory conversation with 3M back in 2005, while the deal closed 10 years later in 2015, he said.
At the time, 3M was interested in one of Polypore’s four filtration lines, while in 2007, Toth met with Asahi Kasei to discuss its interest in Polypore’s healthcare filtration business.
Late in 2013 to early 2014, Polypore was approached by six to seven companies interested in one to three business lines.
Starting in mid-2015, Polypore engaged with 3M and Asahi Kasei in joint negotiations and “came to a deal nearing the ZIP code”. Polypore brought on Bank of America Merrill Lynch in September to help with closing the deal.
The deal eventually was signed in February 2015, in which Asahi Kasei would buy Polypore, but immediately before the deal closed, 3M would buy Polypore’s separations media segment for $1.0bn.
“It was two hard-wired deals, with one not happening without the other,” said Toth.
Along with persistence and creativity, another of Toth’s recommendations on M&A is to “make things happen before they happen to you”, as in don’t wait for deals to come to you.
And most critical of all, he said: “Know the value of the asset precisely and what would change that. You have to separate facts from emotion.”