Some of the names are old….some are new. Some of the companies are big…..some are small. But there is something that all these companies have in common.

What is it?

At some point in time, each one was created via acquisition or was acquired in a transaction where chemical industry executives/managers had a significant equity stake in the business.

Over the years, the chemical industry has seen a steady stream of deals where executives/managers participate in the buyout of a chemical business. Having a significant equity stake in a chemical company is the goal of many executives in the industry. The following article discusses some characteristics of the MBO executive.

It was written by Ilexa Yardley, a finder for private equity groups (www.ilexayardley.com/ilexa.yardley.htm) who works with Lorelli & Co., Inc. on management buy-outs in the chemical industry.

The Management Buy-Out Executive: Ten Characteristics

Many senior executives are taking advantage of the economic conditions that make buying divested divisions or segmented operations of larger corporations a viable career strategy. Here are ten characteristics of a successful management buy-out executive:

1. Has Specialized Knowledge
   The executive has accumulated specialized knowledge about the chemical industry by spending all of his or her career in it. He or she knows how the industry operates, who the players are, and what the future trends are. He or she is also keenly aware of the strengths and weaknesses of these processes, people, and trends (and can work them to his or her advantage).
   
   
2. Can Build and Keep Competitive Advantage
   The executive has demonstrated that he or she can build and keep competitive advantage by using adroit strategies involving products, people, and/or processes. This person has developed a history and a reputation for doing this. He or she is creative and has an intuitive understanding about when to hold or fold divisions, departments, strategies, and projects.
   
   
3. Can Build and Keep Barriers to Entry
   Over time, the executive has shown that he or she can build and keep barriers to entry in a particular segment involving customers or geographies or product lines. The person has shown that a barrier to entry can be built using either size or coverage strategies. The executive also knows when his or her barrier is no longer effective, and can shift gears and change strategies to align with stronger competitors when necessary.
   
   
4. Is A Proven Consensus Builder
   The executive is a natural consensus builder and he or she uses this talent to build winning alliances and teams. The executive has accumulated a loyal, competent network over a long period. People like to work with him or her, and he or she continually engenders feelings of loyalty, integrity, and pride in quality performance.
   
   
5. Understands Financial Underpinnings of Economy and Industry
   The executive has a solid understanding of the financial repercussions of the economy on the chemical industry, as well as the industry on the economy. He or she can see and think both near and far-term, understands business cycles, and can adjust financial strategies to take advantage of both. He or she has demonstrated that he or she can perform financially under a wide variety of conditions.
   
   
6. Can and Has Worked Well With Financial Community
   The executive is not chemical-industry myopic. He or she works well with financial parameters, with shareholders and other financial stakeholders, and with the overall financial community. The executive enjoys performing financially, and he or she complements and is complemented by others who are financial performers as well.
   
   
7. Has a Documented History of Success
   The executive has a long history of project performance and chemical industry success. He orshe has demonstrated this success with a large variety of products, people, and processes. He understands his role and is especially sensitive to the role that others play with him.
   
   

8. Wanted Chemical Industry Executives Seeking Equity Stake in Acquisitions A number of private equity groups are eager to team up with executives in the chemical industry who are interested in either buying out the business they are currently managing or buying out another chemical business where the executive brings needed expertise. To discuss this further on a confidential basis, contact: Charles A. Lorelli, President Lorelli & Co., Inc. Email lorelli@chemicaldeals.com Phone 919-967-1120 Fax 919-967-1108

   Has a Documented History of Failure
   The executive has survived three major failures in his or her career. He or she can talk about the failures as well as his or her role in them. He or she does not expect to never see failure again.
   
   
9. Is Ambitious, Persistent, Patient
   The executive is ambitious, persistent, and patient. He or she is known as a person who neither quits nor gives up, no matter what the circumstances. He or she is annoyingly consistent over time.
   
   
10. Realizes That Doing an MBO is just More of the Same
    The executive realizes that taking over a company and owning it is really just another logical step on his or her career path. He or she realizes and recognizes that no one really owns anything individually. However, he or she is willing to assume the responsibility for his or her destiny as well as the destinies of all the others connected to him or her. This is, after all, a courageous, competent and incredibly service-oriented person.

…having a significant equity stake in a chemical company is a goal of many executives in the industry.