DENVER, CO, January 26, 2017 – Wednesday January 25th of this year, ACG-Denver, the Association for Corporate Growth, held their Corporate Executive Breakfast – A Year in Review & 2017 Outlook.
These events are exclusively for C-Level executives and business owners of companies with annual revenue greater than $5M whose role is not the sale or provision of services to customers, but rather managing and growing the company, and senior executives performing similar roles in larger companies
From awaiting the outcomes of Brexit to the U.S. election and simply” regulation limbo”, deals remained dormant. And yet, deals did happen. The guest-speaker’s challenge was to outline what were the realities of successful deals and how will this influence business conducted in 2017?
The panel assembled for the breakfast-event held at the Embassy Suites Downtown Convention Center in Denver represented four of the most dynamic sectors of our economy – Energy, Housing. Private Equity and Healthcare. Panelists were asked to reflect on their industry’s 2016 and discuss their expectations for 2017.
The morning’s panel of quest-speakers included JC Energy’s CEO, Keith McAslan. Mr. McAslan is a sought after speaker and lecturer on Mergers & Acquisitions having over 35 years’ experience and having authored three books: “Business Owners Handbook”, “Due Diligence Secrets” and “Internal Controls”.
As such, Mr. McAslan was asked for his advice on buying or selling a family business “I like to start with the seller of any business and ask them – This business is your baby – your child… Are you willing to sell your baby? For many sellers – they get wide-eyed and this is an opportunity for the seller to think introspectively and decide if selling the business is really what they want to do. Once the seller has committed to selling the business, then it’s time to move the process forward.”
For any business owner sincere in looking to sell their business, Mr. McAslan had 5 important suggestions:
- Begin preparing to sell the business 2-3 years in advance of the anticiapated transaction timeframe. Focus on the business’ financials thoroughly scrubbing the income statement, balance sheet and cash flow statement these up and removing any personal expenses, etc.
- Engage an experienced firm to perform buyer due diligence on your company to uncover any issues that can be addressed before initiating the sale process.
- Make sure your management-team is in place. Any buyer will want to know that the team is able to continue the businesses success in the sellers absence.
- Make sure you understand the anticipated valuation of the business, accounting for any ad-backs and deductions to EBITDA.
- Clearly define and articulate a growth strategy for the business so the buyer understands the upside potential.
Focusing on the Energy sector within the state of Colorado, several questions were asked of Mr. McAslan, some of these follow:
QUESTION #1 - What is the energy outlook for the Denver region in 2017?
Response by: Mr. McAslan:
“The greater Wattenberg Field and Denver Julesburg Basin commonly known as the DJ Basin has become one of the lower cost basins from a drilling and completion perspective. Given the dramatic increases in takeaway capacity via the Pony Express pipeline the DJ Basin will experience a modest increase in production.”
QUESTION #2 - If the price per barrel goes up why doesn’t production increase?
Response by: Mr. McAslan:
“The industry is recovering from a collapse in crude oil price and companies are not willing to invest capital to increase drilling and production until the price stabilizes and sets a new benchmark.”
QUESTION #3 - Where do you see Natural Gas going?
Response by: Mr. McAslan:
“Currently, Natural Gas is selling around $3.50 per mcf in the US, however in the rest of the world it sells about $10.00 per mcf. As the US increases exports of Natural Gas the global pricing will blend and stabilize around $5-$6 per mcf (million cubic feet). The pricing creates positive economics for the US producers and will incentivize drilling of new wells”
QUESTION #4 - Are there any Technology Advances to lower costs in oil and gas?
Response by: Mr. McAslan:
“Saudi Arabia in 2014 lowered oil prices in an effort to drive US shale producers out of the oil and gas business, so that the US would return as one of their largest customers. However, US producers focused efforts to utilize technology advances to drive down the costs of drilling and deliver oil at lower costs to survive at the reduced pricing levels. This has resulted in increased production primarily in the Periman Basin, Delaware, Marcellus and Utica, and to a lesser extent in the DJ Basin. The technology productivity improvements driving cost down were in completion technology; new drilling designs to allow wells to be drilled in less time, yielding the ability to profitably grow production in the $40 per bbl range”
ACG Denver’s esteemed panelists also included Matt Hicks, Managing Partner, Excellere Parnters; Gino Maurelli, Shareholder, Brownstein Hyatt Farber Schreck; Peter Niederman, CEO Kentwood Real Estate – and was moderated by Tony Giordano, President & Managing Director, BKD Corporate Finance.
About JC Energy: JC Energy is a privately held operations oriented private investment firm based in Denver, Colorado focused on acquiring companies with purchase prices between $10 Million and $250 million and investing in three asset classes: Energy, Real Estate and Industrial Businesses. For more information on JC Energy, visit their site: www.jc.energy
About ACG-Denver:
The Association for Corporate Growth (ACG) is the global community for middle market M&A dealmakers and business leaders focused on driving growth. ACG members have access to data, content and networking opportunities to find the opportunities; capital and knowledge they need to drive and sustain corporate growth. Founded in 1954, ACG has grown to more than 12,000 members organized in 54 chapters throughout North America, Europe and Asia.( For more information, please visit www.acg.org).
