In the first half of 2025, only 243 chemical deals were announced, the lowest half-year count since before COVID. You would expect pricing to crack after a number like that. It did not.
The market slowed, but it did not give up its standards. Capstone says chemicals deal volume fell to 63 announced or completed transactions year to date, down from 87 in the same period of 2024. In the same update, it says average purchase multiples still approached 9.0x EV/EBITDA, up from 8.4x a year earlier, and rose to 9.6x when divestitures were excluded. That is not broad enthusiasm. It is disciplined demand.
Three things explain the mood. Buyers are concentrating on assets with clear margin durability. Private equity is a bigger share of a smaller market. And compliance has stopped being background noise. In 2026, TSCA is not just an operating issue. It is a deal issue, too.
A slower market in specialty chemicals means fewer assets are changing hands, not that buyers have lost interest in the category. The volume drop is real, but so is the willingness to pursue specialty businesses with cleaner margins, steadier end markets, and an intelligible compliance story.
Deloitte's 2026 outlook says only 243 deals were made in the first half of 2025, and it pairs that figure with an important caveat: portfolio reevaluations could still set up a later wave of consolidation. Capstone tells the same story from a different angle. Its July 2025 chemicals update says year-to-date transaction volume fell 27.6% year over year. That matters because specialty chemicals is not being abandoned. It is being sorted. Buyers still want exposure to formulations, applications, and end markets they can understand. What they do not want is a vague story wrapped around a hard asset base. Founders do not need a perfect narrative. They need one that holds up under diligence.
Multiples have stayed firm because buyers are still competing for the small set of specialty assets that look durable. When the market narrows, money does not disappear. It concentrates. Businesses with resilient margins, sticky customers, and clear end-market demand still attract attention, even when the wider deal calendar thins out.
Capstone says average purchase multiples approached 9.0x EV/EBITDA through year to date 2025, compared with 8.4x in the prior year period. Strip out discounted divestitures and the figure rises to 9.6x EV/EBITDA. That is the useful distinction. Weak businesses can still trade at weak prices. Stronger ones have not become cheap simply because the market turned quieter. In plain English, buyers still pay up when the asset feels specific, defendable, and understandable. In specialty chemicals, that usually means a mix of application knowledge, customer entrenchment, and operations that do not fall apart the moment someone opens the diligence room.
When volume falls and multiples hold, the market is not broad. It is selective.
TSCA is turning compliance into a visible part of valuation, diligence, and timing. It adds cost, paperwork, and uncertainty to deals that already demand technical precision. For buyers, that means deeper questions earlier. For sellers, it means regulatory readiness now sits closer to quality of earnings than many owners would prefer.
The policy detail is not abstract. EPA says the current risk-evaluation fee is $4,287,000, with the first 50% due 180 days after publication of the final scope document. That puts the initial payment at $2,143,500 before anyone gets to the softer costs of internal time, outside advice, and management attention. For the 2026 timing context, the cleanest accessible summary is that the next round of TSCA scope and fee activity is expected to land in 2026. That does not mean every specialty chemicals business is suddenly unfinanceable. It means diligence has another hard edge. A buyer now has to understand product exposure, reporting obligations, and the operating burden attached to them. That is one reason sell-side readiness has become less cosmetic and more procedural, a theme that shows up well beyond chemicals in HarborWind's founder's guide to selling a manufacturing business.
Both private equity and strategic buyers are still active, but they are behaving more narrowly than they did in looser markets. Private equity is taking a larger share of a smaller pool of deals, while strategic buyers are reshaping portfolios, exiting weaker lines, and pursuing smaller transactions that sharpen focus rather than simply add scale.
Capstone says private equity transactions made up 47.6% of year-to-date sector deals, while strategic acquirers still accounted for 52.4% of sector transactions. C&EN adds needed texture: private equity deal value in chemicals fell from nearly $20 billion across 278 deals in 2021 to $5.9 billion in 2025, but the publication notes that the decline looked more like a drop in average deal size than a disappearance of activity. BCG says chemical companies are pursuing smaller, more focused transactions to optimize portfolios, access innovation, and build resilience. Wood Mackenzie makes the seller side plain: non-core and underperforming assets are still being divested as companies reposition portfolios. Serious buyers still care about the same old things: clear products, durable demand, and a business that knows what it is. That logic runs through HarborWind's own thesis on why founder-led industrial businesses keep drawing conviction.
Buy. Build. Compound.
Multiples are holding up because buyers are still competing for a limited group of assets with resilient margins, clear end markets, and understandable operations. In a slower market, capital tends to concentrate on businesses that look durable rather than spreading evenly across every asset that comes to market.
The figure signals that the market is selective, not frozen. Fewer deals mean buyers have become choosier about fit, diligence risk, and value. For sellers, it suggests preparation matters more because a weaker asset story does not get the same forgiveness it might have received in a busier market.
TSCA matters because regulatory exposure can affect diligence scope, timing, and cost. When buyers see a specialty chemicals company, they are not only looking at margins and customers. They are also asking what reporting, testing, and fee obligations may follow the products and substances inside the business.
Yes. Private equity remains active, but it is behaving more selectively. Capstone says PE made up 47.6% of year-to-date sector deals, while C&EN reports that total deal value has fallen from the 2021 peak. That combination points to continued activity, but with smaller deal sizes and tighter underwriting.
Strategic buyers are still reshaping portfolios because weak demand, overcapacity, and capital discipline have forced clearer choices about where to invest. Instead of chasing size for its own sake, many buyers are pruning non-core assets and using targeted transactions to move toward categories with better margins and stronger long-term fit.