Strategic energy guidance for private equity firm
Investment Firm Capitalizes on Summit Energy’s Expertise for Successful Acquisition
A leading private-equity firm chose Summit Energy to conduct due diligence on a natural gas company they were considering acquiring. Summit’s detailed analysis served as invaluable information for the investors in need of independent energy expertise.
Industry Knowledge and Leadership Captures New Opportunities: When investment firms acquire new businesses, they need due diligence and analysis of that particular business sector. The energy sector is complex, with many variables that can affect performance and profits, and it takes an in-depth knowledge of the industry to provide investors what they need to make smart decisions. To capture new opportunities and make a profit, investors need market intelligence from an industry expert to negotiate the best deal.
SITUATION
A leading private equity firm was considering the acquisition of midstream natural gas gathering, processing, treating and transmission assets located in central Mississippi and northwest Alabama. With just four weeks to make a decision, the investment firm needed to find out all it could about the natural gas industry and the viability of the acquisition. The company turned to the energy industry experts at Summit Energy to provide the detailed answers and analysis they needed to make a quick but informed decision.
LEADERSHIP
Within the tight deadline, Summit provided a comprehensive report that allowed the investment group to make its decision. The report included a detailed, independent analysis and comparison of the historical, current, and future basis differential trends and influences for specific natural gas delivery and receipt points in the region. The study also included long-term outlooks for the basis differential trends as well as specific drivers that influenced past basis relationships and those that may in the future. Along the way, Summit held weekly strategy sessions with the investment company to discuss critical issues.
RESULTS
Less than six weeks after Summit submitted its analysis, the investment firm, in conjunction with a co-investor, bought the midstream gas company. During the first quarter of operation after the investment, the company generated a gross margin of $12 million on operating expenses of $4 million. According to the president of the co-investor, Summit’s analysis was instrumental in completing the acquisition, and was exactly what the investment companies needed to make their decision and be successful.
