The Complicated Dynamics of Selling Your Company
by Joe Ciccarello, CPA, MST, Gray, Gray & Gray, LLP
There is no “template” for closing a deal, but there is plenty to consider
The ordeal of managing a fuel oil or propane business through the latest global crisis may have you thinking, “I’ve had enough!” If so, you are not alone.
We have seen an uptick in energy company owners seeking our assistance in selling their business through our FuelExchange® merger & acquisition service. It is clear that many veterans of our industry are ready to make their exit. And, despite the disruption caused by the COVID-19 crisis, their timing might be just right.
We are an industry in transition, and one that is at (or near) maturity. There is currently very little organic growth, plenty of stiff competition from pipeline gas, and looming challenges from harsh state and federal environmental regulations. Not to mention the everyday trials of fluctuating product prices, rising payroll and benefits costs, and uncertain climate trends. No one can question your desire to leave these difficulties behind.
My first piece of advice to you is to stop and evaluate why you feel you might want to sell your fuel oil or propane business. Many times, we have worked with owners who develop second thoughts, either because they are not truly ready to move on, or because they have an unrealistic expectation of what the business is worth. You need to be certain about your desire to exit the business and at peace with the prospect of handing over control.
That said, several factors make now a good time to sell. First, many companies have come through the last few heating seasons in a good cash position, with money to invest in the right growth opportunity. In addition, while venture capital activity has cooled somewhat, there are still numerous investors who see opportunity in the ongoing consolidation of the fuel oil and propane industry. The money is out there.
Still, selling a business is a momentous decision, and one that must be made thoughtfully and carefully. Once the decision to sell has been made, the process of the sale takes on an overarching importance. This is where many business owners hit a stumbling block. Where do you start? How do you find the right buyer? What is the right selling price? How can you ensure you walk away with the money you need and the peace of mind you want? What is the difference between an inside sale or an outside sale – and how do you decide which is the best choice?
Because no two businesses are alike, there should never be a “template” of how to sell your company. This is something too many business brokers either gloss over or ignore completely. Someone without an intimate understanding of your business and the industry in which it operates is likely to overlook important fundamentals or miss key details. That could cost you – and not just money.
The seasonal cycles and insular nature of the energy industry can be difficult to navigate. So, the first call you should make is to someone who specializes in working with energy companies like yours. They will be best equipped to recognize and address the quirks and nuances of your business and how they will relate to a buyer. Who better to identify potential suitors than someone who understands concepts as diverse as hedging, bulk storage, will call vs. automatic delivery, service contracts and price protection programs?
There is another aspect to choosing an experienced advisor, rather than a broker, when selling your business. No matter how fed up you might be with the energy industry or how eager you may be to step away from the battle, there are unique dynamics and sensitivities that come into play when selling a company which you have spent years to build up. You want more of a “matchmaker” than a broker — someone who will represent your interests with a sense of what you are going through in the process.
Where do you stand? Are you tired of fighting the battle and want to get out while you can? Do you see the present disruption as a timely opportunity to make a move? Or has the crisis put a crimp in your previous succession plan and you need an alternate exit strategy? Whichever situation you find yourself in, selling your fuel oil or propane company will be smoother and more rewarding in multiple ways if you choose the right partner to guide you through the process.
By the way, there are two sides to every coin. All of the above applies to energy marketers who are eager to grow and are seeking opportunities to acquire another company!
Joe Ciccarello, CPA, MST, is a partner in the Energy Practice Group at Gray, Gray & Gray certified public accountants and advisors, where he also manages the firm’s FuelExchange® program. He can be reached at email@example.com.