2010 was a difficult year for the oil and gas industry, but if we’ve learned anything about the resiliency and adaptability of the industry is that 2011 could very well signal a reversal of fortune.  M&A activity in Q1 of 2011 has heated up, the global energy markets are expanding and a new oil superpower is on the horizon.  Read the entire Q1 Energy Newsletter authored by CFA’s Bud Boles and the Energy Industry Practice group for an in depth analysis.

To subscribe to CFA’s Energy Newsletter and to download past issues, please click here.

Posted by Roy Graham.

Energy markets are in constant flux with sometimes sharp and abrupt spikes occurring while simultaneous long-term trends are evolving on an underlying plane.  The nature of these markets makes it imperative to stay abreast of energy news and to understand the multi-dimensional dynamics of the markets and their affects on the economy and your business growth strategies.  Corporate Finance Associates’ Energy Practice Group is dedicated to staying current on the changes in the Energy Markets and to identifying long-term trends.  Led by Chairman Bud Boles, an industry veteran with more than 50 years of global experience, the CFA Energy Practice Group publishes a quarterly newsletter that reports and analyzes these changes.

Some recent headlines: Crude oil prices were propelled higher at the end of January 2011 due to political unrest in Egypt and the Middle East.  According to the International Energy Agency Oil Market Report, global oil product demand has been revised up by 120 kb/d.  IEA reported that, at 87.8 mb/d in 2010, global oil demand rose by 2.8 mb/d year-on-year, and should reach 89.3 mb/d in 2011 (+1.5 mb/d year on-year).  There are many significant uncertainties that could push oil prices higher or lower than current expectations. 

Among the uncertainties are decisions by key OPEC member countries regarding their production response to the global recovery in oil demand; the rate of economic recovery, both domestically and globally; fiscal issues facing national and sub-national governments; and China’s efforts to address concerns regarding its growth and inflation rates.  In addition, even though Egypt is not a major supplier of crude oil or natural gas to world markets, the recent unrest in that country which has spread throughout the region raises concerns over world energy supplies.   Key transit routes for energy and other goods could be disrupted, while pipelines and ports could become targets for warring factions.

To read the 2010 Q4 Energy Newsletter for more Energy Market information click here.

Posted by Roy Graham.

The worst oil spill in history has been capped and now we will witness serious subsequent actions such as endless litigation, enormous claims, some of which will be exaggerated and others exonerated. Certainly, to the Gulf of Mexico, the devastating losses of life, jobs and permanent damages cannot be minimized, belittled or overlooked.

As a member of CFA’s Energy Industry Practice Group, I keep abreast of developments in the U.S. energy markets. Each quarter we analyze the current energy climate taking into consideration a variety of factors and summarize it for you in our Energy Newsletter. For a complete look at the Q3 Energy Industry Newsletter, click here.

To view previous issues or to regularly receive our Energy Industry Newsletter, please visit our website to subscribe.

posted by Herbert “Bud” Boles

When selling all or part of a business, identifying qualified buyers is very important to an effective sales process.  Before I go into my process I would like to share a story that involves my joining CFA in 2004 and being interviewed by a senior investment banker from our Dallas office.

When I was explaining to him my “deal experience” from the four prior years he responded, “Oh, you have been working as a business broker”  I then asked him to explain to me how he distinguished between a business broker and an M&A advisor. He stated that if the “buy-side” was an individual as opposed to a professional buyer (i.e. a Private Equity Group or Corporate Acquisition Group) he would describe the transaction as business brokerage rather than M&A.

His point was that professional buyers are in the market everyday and need very little assistance in evaluating opportunities.  The individual buyer, no matter how sophisticated they think they are, is not in the market on an ongoing basis and therefore, will be less proficient and therefore a more risky prospect.

With that introduction, since joining CFA I no longer deal with individual buyers.  My concentration tends to focus on Read more »

Case Study

Situation: In 2001 CFA was engaged by Bronco Manufacturing, an oil rigs parts specialist, to prepare a business valuation and assist in evaluating unsolicited offers over the next couple of years. Bruce and Max, the firms partners, asked CFA to take Bronco to market.  in 2004. Bruce was 60 and ready to retire while Max was 50 and wanted to grow the company more aggressively.

Solution: We considered a leverage buyout for Max, but determined a re-cap with a private equity group was a better strategy for both owners. This journey took three years and we kissed a lot of frogs along the way. We contacted over 100 potential acquirers. Ninety percent were Private Equity firms. From start to finish, Bronco received 11 letters of intent and ultimately found the right partner. The long time line may lead one to think something was wrong with Bronco, but that is not the case. The client was very selective. The good news was that the value of the company quadrupled during that period. This transaction illustrates the importance of patience, persistence and tenacity, as well as a belief that there was a “right” buyer for Bronco.

Case Study

Founded in 1964, M&M Pump & Supply is a leading distributor of comprehensive systems and components used in oil and gas drilling and production to gas producers and industrial customers located primarily in the Illinois Basin. The Company also provides oil field services such as hydrostatic pipe and tank testing and cleaning, delivery, and equipment rentals. M&M Pump & Supply retained the services of Corporate Finance Associates to identify and negotiate a deal with a strategic acquirer.

M&M Pump & Supply was acquired by DN Partners, a Chicago-based private equity firm with investments in lower middle-market companies generally based in the Midwest. (www.dnpartners.com). The Company specializes in partnering with management teams to facilitate corporate spin-offs, family succession transactions, recapitalizations, buy and build strategies, and management buyouts. DN Partners’ other business interests include manufacturing, packaging, printing, and communications.

Case Study

After trying unsuccessfully to complete a management buyout by the President and 25% owner, CFA was hired to make a Transaction happen. Working with both owners, CFA was able to bring the right balance of debt and Private Equity to the table to do a transaction favorable to all parties. The resulting value was 60% above what the owners had originally anticipated. They were able to select from four competing prospects. Taylor is a $160 Million company using 300 semi’s to transport crude oil from wells to Taylor’s pipeline injection points, so the structure had to allow the Cap X of adding new trucks as they grow.