Closing the Deal: Valuing and
Acquiring a Propane Business
Moderator: Steve Abbate
[email protected]
860-592-0089
M&A Advisory * Business Valuations * Strategic Planning
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Steps to a Successful Transaction
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Find a Company to purchase
Value the business
Present an offer (LOI)
Perform due diligence
Execute the closing documents
Transition the Company
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Evaluating the Buyer/Seller
Buyer Evaluating Seller
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Geographical
Product Mix
Financial Information
Human Resources
Real Estate/Fuel Storage
Growth Opportunities
Cultural/Union
Seller Evaluating Buyer
1. Financial Capabilities
1. Cash or Earn-out
2. Contingencies
3. Property Purchase/Lease
2. Employees
3. Customers
4. Reputation
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Valuing Energy Marketer Assets
Common financial valuation methods:
• Multiple of EBITDA (Operating Income)
Gross Profit – Adjusted Operating Expenses = EBITDA
• Distributable Cash Flow or DCF
Gross Profit – Adjusted Operating Expenses – Capital
Expenditures & Investments = DCF
• Return on Equity or ROE
Net Income divided by initial investment = ROE
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Key Value Drivers
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Percentage of company owned tanks
Supply and distribution capabilities
Exposure to alternate fuel conversions
Customer demographics
Margin and margin expansion opportunities
Supply and demand for the Company assets
What financial valuation methods do you
use and what other considerations do you
consider when valuing a business?
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Low Fuel Costs & Value
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Low Fuel Costs & Value
Lower energy costs have supported margin
expansion in most areas and resulted in
reduced operating expenses.
How have lower energy costs
effected the value of propane
companies?
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Diversification and Value
Many fuel marketers have diversified
revenue streams including multiple fuels,
HVAC services and other home services.
What considerations do you take
into account when valuing a
diversified business?
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A Sellers Perspective
“If you owned my business you would make
more than we do so it should be more valuable
to you.”
Do you value a business on how
much money the company made
historically, or do you value on how
much money you will make in the
future?
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Due Diligence & Closing Documents
The assets have been valued and agreed to. A
Letter of Intent has been executed. Now it is
time to close the deal.
But wait!
We still need to get through due diligence and
the closing documents.
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Ralphie's Little Brother
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Closing the Deal
Navigating due diligence and negotiating
the final documents are critical times in
closing the deal.
Can you give our audience some
pointers on how to finalize a
successful transaction.
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Questions?
Moderator: Steve Abbate
[email protected]
860-592-0089
M&A Advisory * Business Valuations * Strategic Planning
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