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Funding Patterns in the North American Specialty Chemicals Industry : Increases in Merger and Acquisition Activity to Constitute a Major Part of Future Funding Requirements

This study provides a breakdown of the fund sourcing and deployment patterns in the North American specialty chemicals industry. Historical funding trends were analyzed to provide insights into the mode of funding (debt or equity), the instruments used to raise these funds, and the funding patterns across small-, medium-, and large-sized companies. In addition, the current and future trends that drive funding requirements in this industry were analyzed and used as a basis for providing estimates of future funding requirements.

Key Findings

Historically, small-sized firms in the specialty chemicals industry have struggled to raise funds from capital markets due to the volatility in their financials. Their reliance is more on private equity (PE) and venture capital (VC) funding to sustain operations and investment. Small companies that have well-established research and development (R&D) or distribution capabilities get quickly acquired by larger companies if they are unable to raise enough cash to sustain their growth.
Medium companies with revenues greater than $ million have been able to secure significant amounts of funding from capital markets. They predominantly rely on debt financing with a growing scale of operations so they can benefit from financial leverage.

Large companies maintain a stable debt-to-capital ratio with a marginal tendency towards leveraging. They, however, vary their debt levels depending on the expected interest rates in the market. The US Federal Reserve’s gradual withdrawal of quantitative easing measures is likely to see large companies increase their reliance on equity financing to avoid higher interest expenses arising from debt.
The bond markets have been dominated by corporate medium term notes (MTNs) due to their characteristic flexibility in structure and documentation. MTNs are closely followed by the traditional mode of debt financing through corporate debentures. In the equity market, shelf-registration, followed by public investment in private equity (PIPE) deals, have been the most popular mode of funding due to their lower cost of issuance.

Table Of Contents

Funding Patterns in the North American Specialty Chemicals Industry 
Table Of Contents
1 EXECUTIVE SUMMARY

Executive Summary
1. Key Findings
2. Key Findings

2 KEY TERMS AND DEFINITIONS

Key Terms and Definitions
1. Key Terms and Definitions
2. Key Terms and Definitions

3 INTRODUCTION

Introduction
1. Research Objectives and Scope
2. Research Objectives and Scope
3. Research Methodology

4 HISTORICAL FUND SOURCING PATTERNS

Historical Fund Sourcing Patterns
1. Equity as a Source of Funding
2. Debt as a Source of Funding
3. Debt-to-Equity (DE) Mix

5 HISTORICAL FUND DEPLOYMENT PATTERNS

Historical Fund Deployment Patterns
1. Fund Deployment Patterns—Firms with Revenue Less than $100 Million
2. Fund Deployment Patterns—Firms with Revenue Less than $100 Million Discussion
3. Fund Deployment Patterns—Firms with Revenue Between $100 Million and $1 Billion
4. Fund Deployment Patterns—Firms with Revenue Between $100 Million and $1 Billion Discussion
5. Fund Deployment Patterns—Firms with Revenue Greater than $1 Billion
6. Fund Deployment Patterns—Firms with Revenue Greater than $1 Billion Discussion
7. Fund Deployment Patterns—MandA Buy-Side Analysis
8. Fund Deployment Patterns—MandA Buy-Side Analysis
9. Fund Deployment Patterns—MandA Buy-Side Analysis

6 ESTIMATION OF FUTURE FUNDING REQUIREMENTS

Estimation of Future Funding Requirements
1. Market Trends and Impact Analysis
2. Market Trends and Impact Analysis Explained
3. Market Trends and Impact Analysis Explained
4. Estimation of MandA Deal Value for North American Specialty Chemical Firms
5. Estimation of Future Funding Requirements
6. Estimation of Future Funding Requirements

7 FUND SOURCING ESTIMATION

Fund Sourcing Estimation
1. Estimated Debt-to-Equity Proportion
2. Estimated Debt and Equity Proportions Across Revenue Ranges
3. Estimated Fund Distribution—Base Case Scenario
4. Estimated Fund Distribution—Base Case Scenario Discussion
5. Estimated Fund Distribution—Low Funding Scenario
6. Estimated Fund Distribution—Low Funding Scenario Discussion
7. Estimated Fund Distribution—High Funding Scenario
8. Estimated Fund Distribution—High Funding Scenario Discussion

8 CONCLUSION

Conclusion
1. Conclusion
2. Legal Disclaimer

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