Business growth panel discusses financing, acquisitions

Panelists at one Propane Expo session in Nashville, Tennessee, discussed how propane marketers can raise the cash needed to grow organically or through acquisition. The session gathered experts from various funding segments. Here are some highlights related to the acquisition part of the discussion.

Abbate

LP Gas asked Steve Abbate of Cetane Associates, who moderated the panel, about what stood out to him from the session.

“Almost all buyers will get some type of financing from a bank or investors to complete a transaction. Most banks who lend to buyers have blanket liens on all the assets of the buyer’s company. This puts a seller in second position if the buyer asks for some type of seller financing. There may be a strategy where the buyer puts leases on some equipment such as tanks or vehicles. The leases can be for a small percentage of the value of the underlying asset. This would put the leasing company in first position, even if they only had a small percentage of the value in a lease. This may open the door for a seller to have first position on those hard assets in the event of a partial owner financed sale.

“On the same subject, the panelists mentioned that the bank may be able to carve out some of the assets to give a seller first position. We have never seen this, and I think it still needs to be tested, however this could be an advantage for a buyer if they have this flexibility.”

Bill Summers, Vision Financial Group

Summers

In the context of selling, “Get somebody who knows how to position you to show your best self. … You want them to be tough on you and you want them to ask you difficult questions. Get expert advice. Invest in yourself. If you’re not taking care of yourself, you can’t take care of your employees; you can’t take care of your family. Choosing the right adviser or investment banker to represent you during a sale of your business is an investment in yourself. The right adviser knows the market, and they know how to best position your business in the marketplace so that you can maximize your price.”

Daniel Head, Brown Brothers Harriman

“The quality of financial information and business information is critical for the buyer. When you get ready to sell, have a third-party professional look at your books. There’s a definite ROI when it comes to an exit.”

Frank Cory, Peoples United Bank

“Marketers are good at what they do, but anytime they want to grow, they run into mistakes of insisting they do everything by themselves. You can’t do everything on your own. You need a good controller and IT person as you grow. … Make sure you have good people.”