New Kearney study shows a rising M&A trend in the chemicals industry

• Executives' sentiment points to an increase in deal activity across all regions. More than 60 percent of those surveyed expect M&A to grow in their regions.
• Tariffs are changing deal rationales as more players are using M&A to make their supply chains more resilient.
• Earnouts, phased closings, and contingent pricing mechanisms, originally popularized during the pandemic, have become standard deal tools to manage persistent market volatility.

CHICAGO, June 24, 2025 /PRNewswire/ -- Kearney's annual study of chemicals executives shows potential for the industry to see a rise in M&A activity in 2025. Conducted in May, this year's survey found that more than 60 percent of leaders across regions are optimistic about M&A growth, an increase over last year. The study reveals an optimistic outlook after several difficult years for the industry and a marketplace that is adjusting to geopolitical instability and tariff and trade uncertainty.

Kearney's latest study found that 80 percent of executives in Europe and Asia Pacific and about 70 percent of those in North America are considering reshaping their portfolios and consolidating through M&A to capture cost synergies. More than 55 percent of those surveyed say they plan to leverage volatility to make their portfolios more resilient through M&A rather than investing in R&D or organic growth.

This comes after both North America and Europe saw an increase in deal activity in 2024. Corporate M&A activity in the United States reached $42 billion in 2024, its highest level since 2019. US economic growth has outpaced other mature economies in recent years, and certain Asian and European companies have acquired American assets in response. Domestic players are also reshoring operations more frequently.

Around the world, Chinese corporate M&A decreased by about 27 percent year over year in 2024 to $8.8 billion, its lowest in more than a decade. Despite this, local consolidation in Asia is expected to accelerate, particularly in agrochemicals and intermediates across China, India, and Southeast Asia. At the same time, M&A transaction volume by financial investors has reached its highest level in more than a decade, totaling $13.7 billion.

In Europe in 2024, financial sponsor M&A activity reached $4.1 billion, showing growth that is expected to continue in 2025. In the Middle East, sovereign wealth funds and state-owned enterprises are acquiring more assets around the globe, particularly in European and Asian specialty assets. Corporate investors are focusing on joint ventures in the fertilizer and petrochemicals sectors.

"Momentum is building in chemicals M&A, as market participants more actively manage long-standing challenges such as tariffs, supply imbalances, and constrained financing environment," said Kearney Partner Andrea Menegazzo, co-author of the report. "In fact, the executives we interviewed characterized the current environment with a sense of cautious optimism. Deal activity is expected to increase as strategic investors rebalance their portfolio, while financial sponsors actively seek opportunities to deploy capital and manage portfolio companies."

M&A activity does face certain headwinds, however. More than 90 percent of North America respondents cite unfavorable or unclear deal valuations as a key barrier, making it difficult for investors to project robust returns. In addition, the industry continues to see a mismatch in valuation expectations, and, after reaching highs during the COVID-19 pandemic, exit multiples are now down, though sellers maintain high ask levels.

Still, this year's study shows signs that the industry has key investment opportunities amid the turmoil, particularly around the carve-out of assets from chemicals producers and buy-outs of high-growth specialty chemicals.

Read the full report here.

About the 2025 Chemicals Executive M&A Report

Now in its 11th edition, the 2025 Chemicals Executive M&A Report has been issued annually since 2014. For this 2025 edition, Kearney interviewed leaders in the chemicals industry in the first half of 2025. Analysis of additional research, carve-outs, and restructures led to proprietary advisory and forecasting on M&A deal flows in the industry.

About Kearney

Since 1926, Kearney has been a leading management consulting firm and trusted partner to three-quarters of the Fortune Global 500 and governments around the world. With a presence across more than 40 countries, our people make us who we are. We work impact first, tackling your toughest challenges with original thinking and a commitment to making change happen together. By your side, we deliver—value, results, impact. To learn more about Kearney, please visit www.kearney.com.

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