What is Attractive about Chemical LBOs

The high level of interest paid by LBO firms to chemicals appears to be justified by the returns. Our research indicates that, over a 20-year time frame (1980-1999), LBO investments in chemicals have clearly outperformed both the S P 500 and the all-sector LBOs, while over the same period publicly traded chemical companies have slightly underperformed the S P 500 (Fig. 8.5). This cannot be explained by leverage alone, since LBO investments in chemicals have outperformed publicly traded chemical companies even on a leverage-adjusted basis (Fig. 8.6). Over the last five years, however, the bull market managed to push the performance of the S P 500 beyond what LBO investors could achieve. 

Publicly traded chemical companies have underperformed the S P 500 

LBO Investments In chemicals have outperformed both the S P 500 and all-sector LBOs 

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