Many chemicals are produced using batch processes.

This basically means that a batch of product is made by adding several ingredients to a reactor, allowing them to mix and react, and then the finished product is taken out of the reactor and put into containers for sale or use.

In an ideal world, you would add a ton of ingredients and output a ton of finished products. Of course we do not live in an ideal world. In most cases the output is less than the sum of the inputs – and there is good reason.

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Buying a complete chemical manufacturing business or company has become a fairly straightforward process, but over the last few years, many large companies have been selling off pieces of businesses in what has become known as a “carve-out transaction.”

A carve-out transaction can be a bit more tricky. More due diligence is required. Sometimes the business being carved out will have shared assets, service, utilities and even shared management. It could even be just a product line. In many cases separate historic business information is unclear. It is not unusual to find that the carve out is little more than a technical package and a customer list.

These can be great acquisition opportunities, but they often come with a commensurate increase in risk.

Carve out transactions require significantly more due diligence than normal. The acquiring parties often do not have the additional resources or experience needed to do the work required. Chemvalon can provide cost-effective experience to help the acquisition due diligence process and as well as post-acquisition transition help.

If you are considering a carve out acquisition or sale, why not ask Chemvalon to help with pre-sale preparation or pre-acquisition due diligence. Chemvalon has a team of industry specialists capable of adding the extra horsepower your team needs to get the job done. Chemvalon can provide both buy-side and sell-side due diligence.

Chemical companies tend to be capital intensive and usually have good, effective systems to control hazards and risks.

But still things go wrong. Why?

More often than not it’s the little things, that, left unchecked, snowball into bigger things. Usually it’s human error. In most cases, it turns out that a procedure was not followed and nobody noticed or cared until it was too late.

At Chemvalon, we have a saying, “ You get what you inspect, not what you expect.”

As part of due diligence, we look for checks and balances, and we check for objective evidence of compliance. Sign-off sheets are great – but what does your gut tell you? Does it really look like the task signed off was performed with knowledge and enthusiasm?

Simple housekeeping is a good barometer of the health of a business. All the systems in the world will fail unless someone actually takes the time to inspect and report on what is actually happening. Employee interviews will often reveal that all those systems are just paper over the cracks.

Let Chemvalon inspect your acquisition target to ensure that you really get what you expect. Essential chemical industry due diligence starts with Chemvalon.

Every year thousands of workers in the US are injured because equipment safety guards are either missing or incorrectly installed.

As part of your due diligence study, a quick tour of the factory will reveal a lot if you know what to look for.

Rotating equipment such as motors and gearboxes are easy items to check. All too often a maintenance operation is left incomplete because the equipment guard was not reinstalled. The equipment is put back into service, but without the safety guard, the situation is ripe for a serious accident.

Equipment guarding is not usually expensive and in most cases it is an easy fix. Loss of life or limb from unguarded equipment is always serious and can never be fixed.

Don’t buy a business that has pre-existing OSHA violations. As part of your acquisition due diligence, ask Chemvalon to provide an assessment of the state of equipment guarding and the likely cost to remediate the problem.

Chemvalon provides operational due diligence services to Private Equity investors.