Do you understand how investment banks can help chemicals companies grow? Chris Mudd, the Managing Director at Chiron Financial LLC, shares why as he joins host Victoria Meyer in this episode. Chris uncovers the mystery of investment banking and shows the many things they offer to help those in the industry. From raising capital to M&A support to advisory services, he tells us the key distinctions that separate investment banks from the rest. Follow along to this conversation to understand more about investment banking and how you can grow to your full potential.
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Finance Towards Profitability: Investment Banking With Chris Mudd

This is the 25th episode. That number amazes me and it probably amazes you. In honor of the 25th episode, we’re going to be doing a drawing for some cool The Chemical Show swag and there are three ways to enter. One, rate and leave a review on your podcast player, which could be Apple, Stitcher or Podchaser. The second way to enter this drawing is to post a message about the show on Twitter and use the hashtag #TheChemicalShow. The third way is to share the show on LinkedIn and tag us in your share. One of those three ways will get you entered into a drawing. In fact, do it all three ways and get more chances to win and you’ll be getting some cool swag.
 
 
 
I am talking with Chris Mudd, who is Managing Director at Chiron Financial, an investment bank. The M&A market in chemicals has heated up. We’re going to get some insights on that and investment banking from Chris. Chris has a pretty unique path into investment banking. Prior to joining Chiron, Chris spent many years in senior roles in the chemical industry, including at Desco polymers, which is a Dow and Exxon joint venture, and as CEO of a private equity portfolio company. Chris brings that unique and deep chemical industry experience into his role at Chiron. Welcome to the show, Chris.
 
Thanks, Victoria. I’m happy to be here.
 
I’m delighted to have you here. Tell us a little bit about Chiron.
 
Chiron is a middle-market investment bank, a little bit unique. We serve the middle market, which is defined as companies that are in the $20 million to $300 million revenue range. We provide a full suite of services. We are headquartered in Houston, but we’ve got offices around the US. We’ve got offices in Europe and Latin America.
 
Chiron’s been around for many years. They have done hundreds of transactions. It’s an investment bank that is able to provide a full suite of services but focusing on some of the smaller clients that are interesting to serve. I’ve been with a number of these companies that are in that middle-market range. That’s my sweet spot as well.
 
Tell us a bit more about what does Chiron does. Investment banking is a bit of a mystery to many people. What role do Chiron and other firms play in the industry?
 
I joined Chiron after having worked in the chemical industry my entire career in more operating roles. I’ve always worked for companies or led companies that made and sold products, chemicals, polymers, lubricants or whatever. The whole world of investment banking was a little bit mysterious to me. I became intrigued by it when some of the businesses that I was with went through various M&A transactions and utilized investment bankers. I think the key distinction is that investment banks don’t own companies. We don’t have portfolio businesses. We don’t have money to invest.
 
What we do is three things. We help companies raise capital. That could be a combination of debt or equity or both. We also help companies with M&A support. If a company is either going to be selling or looking to make an acquisition or maybe even sell part of the company, we do a lot of that. The third thing we do is advisory services. We do a lot of financial advisory or strategic advisory to these companies. A lot of times, we do 2 or all 3 of these services with the same client.
 
What are some of the trends that you see going on in financial markets? Particularly, as it relates maybe to chemical companies and these mid-market companies that you serve?
 
It’s been a rollercoaster, as we all know. Valuations are at a peak. It is incredible when you see some of the multiples of EBITDA of some of the transactions in the chemical industry and in industries in general. The stock market is at an all-time high. The public markets are going well in driving valuations and driving price-to-earnings ratios to an all-time high. That then translates into the private markets.
 
For the most part, what investment banks do is deal with non-regulated entities. The people that we work with are private equity funds. We work with a lot of family offices. We work with non-regulated private banks and sources of capital. They have to keep up. If the public markets are at these high multiples and high valuations, then the private investors are looking for places to put their money to work. As everybody knows, there is a huge amount of money looking to be put to work in a variety of industries. There’s a lot of money out there that people are looking to invest.
 
That’s what I’ve heard. There’s been just a lot of money waiting to be invested.
 
It’s been an interesting evolution. At the beginning of my career, private equity was not as prevalent in general. In the chemical industry, it was pretty rare to see private equity companies getting involved in chemicals. This is probably a phenomenon that started many years ago. It became pretty active and you’ve seen a lot of private equity firms focusing on chemicals.
 
These private equity firms raise billions of dollars of capital. They’ve got all this dry powder that they’re looking to invest in. The second most common question that I get is investors that are looking for interesting investment opportunities. There’s a lot of money that needs to be put to work. There are not enough good ideas on where to invest that. That’s a service that we provide. We were able to present to the investors interesting opportunities to either put that or equity into a business or maybe acquire an interesting business that’s for sale. That gives them places that they could potentially invest their capital.
Investment banks don’t deal with big, regulated banks; they deal with non-regulated entities.
Chris, we don’t typically see chemical executives going into investment banking. We do see people going into private equity because it makes a more logical extension to become an operating executive, for instance. What led you on this path into investment banking?
 
I still consider myself an operating executive. I do enjoy dealing with customers, quality issues, supply chain issues, and all the stuff that goes into working for a real operating company. A lot of times at this point in their career, a lot of operating executives will make a move either into private equity or into some other services industry.
 
What led me into investment banking was a few years ago, I was involved in a transaction. You mentioned earlier that I had led the Dow-Exxon joint venture. At some point, as I was in that role, Dow and Exxon decided that we were going to sell that business. We hired an investment bank out of New York City. They came in and they prepared the company for sale. They coached the management team. We put together all of the materials that we could share with prospective buyers and investors and ran a whole thorough process.
 
Ultimately, we sold the company to an Asian strategic buyer. That was my first taste of an M&A transaction. After I left there, I went with a company in Dallas that was very inquisitive. I was involved in quite a few acquisitions and mergers. We IPO-ed that company. The more I got involved in deals, the more interesting I found it. There are common threads. What you’re doing is you’re helping the company to tell their story. You’ve got to put together some kind of a thesis or growth story that you can share with prospective investors.
 
I get a kick out of that. I enjoy helping these businesses. I’ve had the benefit of being able to be part of quite a few transactions in my career. It’s just a lot of fun to work in an investment banking environment and help these businesses raise capital. Every day, I am approached by prospective clients that are looking to raise capital for growth or for acquisition. Maybe they just need to restructure their existing debt and bring in new lenders. It’s interesting to listen to these business cases.
 
It’s not all chemicals. I do get involved in some non-chemical deals as well. There are some common elements. I enjoy helping these companies. I enjoy helping people tell their stories. It’s gratifying to see them get the capital they need to be able to grow their business. Having said that, I still consider myself an operating executive.
 
I’m surrounded by seasoned, talented investment bankers. Most of them are career bankers. I’m sort of the token chemical industry guy here. That makes a powerful team. Having somebody with industry knowledge and experience paired up with people with deep banking experience is a pretty powerful combination.
 
What do you typically see when people start engaging with an investment bank? You guys provide a variety of his services, including the advisory, do you see that as typically a strategic activity or does it tend to be a bit more reactive? Do they recognize that they need to make a change at their company strategically? Or is there something else that’s driving that engagement?
 
I’m going to answer that specifically for the middle market space. As I mentioned earlier, these are the companies that are less than $500 million enterprise value. When you get chemical companies that are in the multibillion-dollar range, they know that they need an investment bank to help them run a process. They’re going to go out and hire the major consulting firms to do strategic management consulting.
 
It’s the smaller businesses that may not realize that they need help. They’re out and they’re frustrated because they’re trying to raise money to expand their business, make an expansion, and for additional working capital to grow revenue. They’re frustrated because the commercial bank that they’re dealing with will not extend additional credit to them. They may not know how to go out and find these non-regulated lenders or equity providers. They may not know the best way to go out and restructure their finances for their business. That’s where we come in.
 
In many cases, we’re providing advisory services. A lot of times, in the beginning, the client doesn’t think he needs help. We have to overcome that. Just recognize that by bringing in a professional investment bank like Chiron in running a process, we’re going to create competitive demand. We will bring in multiple parties that want to work with that client to help them raise capital. There’s a lot of power in that. They’re going to end up having a more successful transaction. They’re going to get the best possible financing for their project by working with a professional investment bank that can provide those services.
 
It’s interesting, to your point, that they don’t necessarily recognize that they need that support. I also find in my consulting engagements that it can be a blind spot for companies. They recognize that they’re trying to execute something, trying to grow, and trying to gain market share. There’s a perception that they already have all the tools in their toolbox. It’s a bit of a blind spot to recognize that they may not have those tools because they’ve been successful up to that point with their toolbox. What you’re doing with Chiron, myself with Progressio Global, my consulting business, is offering up some new tools that they may not know that they need, not know how to access.
 
There are certain industries that are no-brainers in terms of there’s so much growth, promise, and potential that the commercial banks are going to line up to provide capital to grow your business. In the chemical industry, either you’re in a space that’s growing at GDP or GDP plus, but it’s not huge technology-driven play that’s going to blow up in the next three years. It’s slow growth, traditional chemical type of business. It’s not as easy to get these regulated commercial banks excited about providing capital to grow that business.
 
The chemical industry is a little bit complicated. When you’re trying to talk to your banker and get additional capital to grow your business, and the guy can’t even pronounce the name of the chemical that you produce, it’s a little bit tough. It’s not the easiest industry for commercial bankers to relate to. That’s where engaging an investment bank comes in, put the story together and put it into terms. In addition to that, we have a network of sources of capital that we’re we show deals to. We know the people that are interested in some of these investment opportunities, even the ones that are tough to finance, which we see all the time. Some of these deals are not easy.
 
You already touched on a little bit that M&A, transactional activity, and interest in chemicals seem to be strong. You talked about the high multiples. What’s behind the high multiples? What’s behind this high level of interest?
Somebody with industry knowledge and experience paired with banking experience is a powerful combination.
The economy is recovering after a slow year. A lot of companies were struggling and the middle-market companies had a tough time due to the global slowdown and all the things that happened. You’ve got this pent-up demand. People are looking for businesses to buy. Private equity is interested in making acquisitions.
 
One of the things about private equity is they are under a time constraint. When you raise a private equity fund, “I raised $1 billion to invest,” usually, I’ve got two years to go out and find target opportunities to buy. That creates demand for make acquisition. If I don’t get that money invested, I have to give it back to my limited partners. There’s a time constraint that’s ticking there.
 
That’s not necessarily the case for family office money. For private equity, they’re under the gun. That creates demand. I already mentioned the public markets are at an all-time high. That kind of drives up valuations. There’s another factor. In some cases, for privately owned businesses, family-owned businesses, there’s a feeling that capital gains taxes might go up in the future. If I’m going to sell my business, I might want to sell it sooner than later.
 
We don’t necessarily have an opinion on whether that’s the case or not. We really don’t know. We advise our clients, “Don’t do things just for tax purposes. You should try to maximize the value of your company. You should focus on maximizing EBITDA in making your businesses as healthy, strong and successful as you can and then consider selling it. Don’t try to time it based on what you think might happen with corporate taxes because you never know.”
 
Does that get into a little bit of succession planning for some privately held companies? Is that an area that you guys touch on in terms of how to help them? In the chemical industry, there’s a number of companies that were started by entrepreneurs who may be at a point where they want to retire, but they also still need to monetize. Is that an area that you guys can help with as well?
 
That’s a major area of focus. I have relationships that I’ve maintained throughout my career with folks that I know that are entrepreneurial, that have businesses. It can be an outright sale. If you have a business that’s privately held and they’re ready to sell and retire, we can take care of that. Sometimes it’s just a partial sale. They want to bring in a co-investor and they can take some chips off the table, but they’re going to continue to run the business and grow it. It establishes a valuation. Some, if they want.
 
We do that as well. We do partial sales. We’ll bring in an equity investor that becomes a minority owner, a minority investor. A lot of times, these investors really like the entrepreneur to stay involved in the business for some period of time after the sale of the company. That’s pretty critical for continuity purposes.
 
One of the things that I’ve been talking with folks about, one of the real key trends in chemicals, but also elsewhere, is ESG and sustainability. We know that ESG is playing a bigger role in many companies, especially the larger, more publicly traded companies. From my perspective, it seems maybe less of a factor for mid-market companies. Is that true? When you’re thinking about supporting clients in transactions, is a strong ESG record a factor? Is this important?
 
Absolutely. I agree with your assessment. Every major public company is going to have a focus on ESG. They’re going to have a high-level executive that is responsible for reporting, driving that program, and improving their ESG track record every single year. It becomes mandatory for big public companies. A lot of the middle market companies don’t focus on it. It probably feels like a nebulous concept that’s difficult to quantify sometimes. It’s hard to put a value on. Especially the environmental part of it.
 
Most companies understand the importance of very strong governance and controls. That’s a given. The social aspect, again, that’s something that you can address. Environmental impact, especially in the chemical industry, sometimes it’s not easy to improve that. It’s very expensive or requires a complete change of your whole business model. It’s a challenge.
 
The investors that we deal with, the private equity firms, the family offices, the non-regulated sources of capital do look at ESG on these deals. There are a lot of investors that we talk with on almost a daily basis and they have a mandate to look for sustainable companies. They’re looking for investments that are green, renewable chemistry or whatever. They won’t touch a traditional carbon-emitting, old-school type of business.
 
We know what the investors are looking for. It is front and center for a lot of these investors. They think about ESG all the time. With these private equity firms, the limited partners that have invested have given them some mandate. They’re like, “I don’t want to invest in oil and gas. I don’t want to invest in certain industries.” They only want to look at what they think are a clean, sustainable, renewable types of businesses.
 
Some of that is also controlling the perceptions of it as well. What about digitization? Do you see this as a big factor? There are two angles to this. In investment banking, digital is prevalent in everything you do in data management. When you look at the companies that you’re helping, how important is that?
 
When we run a process, it’s 100% digital. What we find, especially with smaller companies, is they’re not going to have, especially, the financial records are just not going to be readily accessible and available. I’m not trying to sound critical. You can very easily run a $20 million company off of QuickBooks. People do it all the time.
 
When it’s time to go out and raise capital, when you want to go have a conversation with your bank, an investor, there is a certain level of accuracy and financial completeness that they’re going to be looking for or else you’re just not going to be successful in raising capital for the business. One thing that is almost universal for us is when we come in to a new client, we start collecting up all the information we can. We digitize everything then we figure out where the gaps are. We have to fill in all those gaps so that we’ve got a comprehensive picture of the company and we’re ready to answer all the questions that we know are going to come from prospective investors.
You’re going to get the best possible financing for your project by working with a professional investment bank.
You guys help provide that complete package for them. The whole world of investment banking and finance, especially when we talk about mid-market companies, is an area that a lot of people don’t understand and don’t have the opportunity to engage with very well. This has been interesting for me and for our audience. If people want to get in touch with you or Chiron, how can they do that?
 
Our website is ChironFinance.com. All of our contact information is on our website. I’m on LinkedIn. I’m pretty easy to find as well. My background is chemicals. I would love to talk to folks and help them think about what their options are if they’re in the chemical space or other industries. There are some common threads that affect all manufacturing and technology industries. I would love to have a chance to talk to folks and let them know what we might be able to do together.
 
Thank you for joining us. I appreciate you taking the time and speaking to me and the audience.
 
Thanks, Victoria.
 
If you enjoyed this episode, in honor of our 25th episode, we are doing a drawing for The Chemical Show swag. There are three ways to enter. One, rate and leave a review on your favorite player. Two, post a message on Twitter using the hashtag #TheChemicalShow. Three, share the show on LinkedIn and tag us in that reshare. Thank you for reading and we’ll see you again soon.
 
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About Chris Mudd
Chris Mudd is an operating executive who has held multiple senior management roles during his 30+ years in the petrochemicals industry. He has experience with strategy development and implementation, corporate carve-outs, divestitures, mergers, and acquisitions. He created and launched a successful public company, led the divestment of a business unit from Dow/Exxon with exit at 8x EBITDA multiple, and has been CEO of a private equity portfolio company.
 
Chris began his career with Dow Chemical where he served in various commercial, business management, purchasing, licensing and financial analyst roles. He was named President & General Manager of a specialty chemicals joint venture of Dow Chemical and ExxonMobil, Dexco Polymers, where he had full P&L responsibility. In 2011 he led the successful carve-out and sale of the business to an overseas strategic buyer for $168M and continued to lead the company under new ownership.
 
Chris became President & COO of CSW Industrials (NASDAQ: CSWI) a company which he created and launched in 2015. Company valuation has grown from $350M at the time of IPO to more than $2B today. Subsequently, Chris became CEO of SGCE/Juniper Specialty Products, a specialty chemicals company owned by private equity and a sovereign wealth fund. Prior to joining Chiron, Chris was President of CJM ChemConsult, an advisory firm that identifies, develops, and supports strategic growth opportunities for investors in the chemical industry.
 
Chris has served on the Board of Governors of the Petrochemical Founders Club and is past-President, Americas Section, of the International Institute of Synthetic Rubber Producers. He previously served as Director of MUD355 and currently serves as President of the Board of a non-profit that supports young adults with intellectual disabilities. He is also co-chairman of the Purdue University parent advisory board.