Market and Technical Due Diligence – Not Just A Rubber Stamp

Mar 18, 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, a quarterly newsletter by global investment bank Lincoln International.  It illustrated the critical role Nexant often plays in guiding investment decisions.

 A securities firm asked Nexant to evaluate its opportunity to invest hundreds of millions of dollars in a manufacturer keen to build a specialty chemicals plant in the US.  The plant would leverage proven technology and produce chemicals for a welcoming market.  

Nexant's team, led by Marios Hatzikyriakou, senior consultant, and Eric Bober, vice president, investigated the technology and the markets.  The return on capital could be appreciable.  The specialty chemicals the plant would produce could be sold at a nice profit.  Nexant's experts suggested alternative configurations for the plant and tweaks to the commercial plan. They flagged risks of the project, especially the risk of building an operation and a market at the same time.  A bad idea, they know from decades of experience.  

The investment, as it was presented, was unbankable.  But there was a way.   The securities firm was happy to accept Nexant's recommendation to fund the investment in two less risky tranches:  first, market development and then plant construction.

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. More information about Lincoln International can be obtained atwww.lincolninternational.com.

Nexant is a leading advisor for the energy, refining and chemical industries. Its clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies and law firms.  Our consultants blend strategic consulting, operational and technical expertise with deep industry knowledge.

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