Chemical companies haven’t lost the common thread linking a string of recent corporate divestitures, according to a recent analysis by S&P Global Market Intelligence. Portfolio optimization is the name of the game. Underperforming assets and those not aligned with core business are on the auction block, facing eager interest from financial sponsors. Let’s run through the most salient findings.

U.K. practice leader and Kearney partner Bahige El-Rayes told Merger & Acquisitions last week that “deep is the new wide” for consumer M&A, and it appears the chemicals industry shares the same compulsion. Lonza AG announced plans to shed its specialty ingredients unit in a $4.7 billion sale to Bain Capital and Cinven to focus on healthcare-facing chemicals in February. PQ Group Holdings Inc. (NYSE:PQG) doubled down on its catalysts business by divesting its performance chemicals unit to Cerberus and Koch Minerals for $1.1 billion in March. The deal follows PQ’s exit of its performance materials business, also part of its transformation into a pure-play refining and catalysts company.

Private equity was a counterparty to $7.4 billion worth of specialty chemicals deals through June 21, according to S&P Market Intelligence. The data set excludes deals that were terminated and those announced for an undisclosed consideration.

Divests could continue to lead the M&A tables. Rather than deploying capital in megadeals that fundamentally reorient strategy, companies could pursue small, discrete acquisitions that give them exposure to a market without weighing in as a potential drag on the balance sheet should markets shift. Here, PQ Holdings’ divestiture is an ideal example as well. While announcing its performance chemicals exit, the company noted it was also acquiring Chem32 for $44 million. The acquisition is miniscule relative to the $1.1 billion divestiture, and gives PQ exposure to an adjacent market to its core refining businesses–renewable fuels.

Other desirable assets private equity could seek as divests continue include most of the specialty chemicals subsectors, like coatings, flavors and fragrances, sealants, elastomers, paints and adhesives. 

High leverage levels are a potential stumbling block for dealmaking, however. Multiple inflation is leaving a smaller window through which PE can bridge the gap between initial bids and exit multiples.

Private equity seems willing to try and squeeze through if recent deal activity is any indication.