(52ab) Buyer Beware – Purchasing a Chemical or Gas Processing Facility – Lessons Learned

Merger and Acquisition activity is heightened during this post pandemic period. Private equity and other corporations are looking to improve portfolios and gain market share to answer increasing consumer demand. Activity in the chemical and gas processing space is also seeing interest from these same parties. However, purchasing a chemical or gas processing facility involves evaluating many important factors than the typical purchase of a manufacturing building or site. Most firms investigating these purchases do not have the know how or the skill to evaluate a purchase of this type of facility. Taking a chance, could lead to inheriting environmental, legal, regulatory, community, and other safety issues that they have not bargained for that places them at risk for further trouble. Those firms that are the subject of these acquisitions can be less than transparent on showing all the issues they have dealing with or have in the past which requires “sleuthing” on the part of the buyer.

Acquiring a chemical or gas processing facility involves looking through productivity, asset health, and maintenance data as a start. It also involves looking at environmental and health information on groundwater, air emissions, and other contamination issues on the site. Investigating regulatory permits, air permits, and licenses is needed to understand their status. Knowing the local and state regulations is also important to evaluate. Investigating history of the site and the state of their right to operate with the community can expose potential risks. Their relationship with federal agencies can be a “deal breaker” for many acquisitions.

My experience as a consulting chemical engineer has involved me with several evaluations with these facilities for potential buyers. These buyers range from private equity firms to large corporations. My evaluations have provided valuable information to buyers that allow them to understand the above issues and potential liabilities. Most buyers only operate through a lens of profitability that the current owners provide to them. The responsibility to understand all the other periphery issues falls under their prevue. This presentation will provide a roadmap to understanding how to evaluate a chemical or gas processing facility. It will expose the lessons learned that can be a potential “non-starter” for many purchasing decisions.