Coalesced rubber particles having an average particle size of 5-50 microns are produced by: (1) adding simultaneously to a latex of pre-crosslinked rubber particles a solvent and an electrolyte solution to form swollen rubber aggregation particles, wherein the solvent has a lower boiling point than water and a capacity of swelling the rubber by at least 10 wt %, and the electrolyte is a solution of at least one metal salt; (2) removing the solvent under atmospheric pressure or low vacuum and at temperature greater than 80° C. to coalesce the rubber into particles having an average particle size of 5-50 50 microns; (3) filtering and washing with methanol; and (4) filtering the washed particles to remove methanol. An epoxy resin is blended with the particles and residual methanol removed, to obtain a blend containing coalesced rubber particles having an average particle size of 5-50 microns in the blended state.