Case Study – Market and Technical Due Diligence – Not just a rubber stamp

Mar 19, 2017

Deep sector expertise provides highly focused and significant insight into issues that drive value from an investment.

A case study of a typical Nexant due diligence engagement appeared in the most recent issue of Market Update: Chemicals, the quarterly newsletter of global investment bank Lincoln International.  It illustrated the critical role Nexant often plays in providing insight, identifying and addressing potential risks, as well as identifying opportunities to make informed investment decisions.

A securities firm asked Nexant to evaluate its opportunity to invest hundreds of millions of dollars in a manufacturer considering building a specialty chemicals plant in the U.S.  The plant would leverage a novel patented technology that was based in part on a similar plant located outside the U.S.  The loan would be repaid by cash flow generated by the sale of a portfolio of specialty chemicals from the new plant.  The Nexant engagement focused on understanding the technical and financial soundness of the investment as well as how it should be configured technically and structured commercially to meet financing hurdles.  Nexant recommendations resulted in actions to change the nature and size of the investment to support needed market development as it strengthened the manufacturer’s market development efforts.  The financial services firm avoided making a well-intentioned, but ill-timed investment.  It has since engaged Nexant to help evaluate other, non-related investment opportunities.

Lincoln International specializes in merger and acquisition advisory services, debt advisory services, private capital raising, and restructuring advice on mid-market transactions.  The firm provides clients with senior-level attention, in-depth industry expertise, and integrated resources.  Lincoln has completed over 65 transactions in chemicals, materials, and food and pharmaceutical ingredients.  More information about Lincoln International can be obtained at www.lincolninternational.com.

Nexant is unique in being able to provide both technical as well as commercial due diligence for proposed investments.  It has an unrivalled perspective into the shifting landscape as well as changing fortunes that affect the entire energy and chemicals value chain.  Nexant’s consultants are among the most experienced in the industry at evaluating technologies, costs, and benchmarking operations.  Nexant also has proven methodologies for building robust market and pricing projections which are well-respected by investors.  This combination of technical and market expertise covers both commercialized as well as developing technologies. 

With a long history of experience supporting clients in their transactional needs, Nexant is highly qualified to advise on technical, market, and environment issues. 

To read more about Nexant’s market and technical due diligence capabilities click here.