LP Gas, May 2010

e A C Q U I S I T I O N S of retail propane operations making four since 2003 Norris cites one reason for the recent slowdown in acquisitions and another reason for that trend to change There has been a disconnect between what we as a buyer are willing to pay versus what a seller is willing to take We havent seen a whole lot of acquisitions activity because that disconnect is there he says Now that weve had two decent winters in a row that disconnect has shrunk some Buyers might realize maybe we should spend some money and sellers see two good winters in a row with no guarantee for a third Not so fast Just as potential sellers might fi nd reason in recent winters to divest their businesses others especially potential buyers are skeptical of whether one or two particular heating seasons will actually jump start the acquisitions market I think it becomes a factor but it doesnt become the factor says John Armentano vice president of acquisitions for Paraco Gas Corp in Rye Brook N Y From our experience its going to be more timing than anything and developing relationships so when people are ready to sell they have somebody they can trust While the past two winters have been positive in Paracos region Armentano says margins have been tighter compared to other parts of the country Even so prior to making an acquisition Paraco looks at the overall quality of a company instead of one or two winter performances The biggest factors are the quality of the company the quality of the market and then we look at margins says Armentano whose company seeks to acquire 3 to 5 million gallons annually We want to buy a company that we know we can grow and prosper with AmeriGas looks at prospective companies and their value over a long period of time instead of a one year anomaly says Jeff Kaminski group director of AmeriGas acquisitions program Buyers will adjust or normalize margins and volume over a specifi c time frame often the past three years to learn about a business This will take into account a margin upswing or downswing a wave of colder temperatures or warmer temperatures A lot of marketers are really smart Theyve been in the business a long time and they know what they saw a year Continued from page 19 Winter Dec Feb 2010 Temperature in Degrees Fahrenheit 229 272 270 239 228 220 272 241 318 348 337 291 419 419 434 382 421 554 281 311 288 327 339 321 National Oceanic and Atmospheric Administration NCDC Climate at a Glance 352 353 462 306 260 250 421 175 185 226 332 88 115 143 210 277 348 436 167 183 282 369 463 254 Record warmest Much above normal Above normal Near normal Below normal Much below normal Record coldest 20 LPGas May 2010 www LPGasmagazine com