Mergers and Acquisitions: What Fuel Dealers Should Know

Throughout the 2020s, millions of Americans will turn 65 in what is known as “peak 65.” This population includes a swath of propane delivery business owners who must decide what’s next for their companies. Some will pass the torch to their next of kin or younger business partners, but others will find that selling the company is a far more enticing option—and one for which there’s certainly a market. 

In this episode of Energy Matters, Cargas Energy Product Marketer Farid Widjaya chats with Barrett Conway of Cetane Associates about mergers and acquisitions in the propane delivery space—why they’re on the rise, how they contribute to company growth, and what ownership changes mean for customers.  

The Recipe for M&As

Mergers and acquisitions are not limited to fuel companies of a specific age or location; rather, the rise in M&As for the energy industry stems from two timely variables: generational shifts and state laws. 

Current owners are aging out and retiring, but the next generation has moved on to other industries like healthcare or finance, which leaves propane business owners in a bind. There’s also the issue of political pressure, with state-by-state legislation creating new challenges for fuel dealers. These companies have two options: up the ante or fold.

A Buyer’s Dream

Conway says some of the best-performing propane delivery companies include M&As in their growth strategies. From mom-and-pop shops to large regional outfits, many fuel delivery businesses are using acquisitions to increase customers and gallons, thereby raising the bottom line.  

M&As also help companies diversify offerings without much headache, whether expanding geographically or incorporating additional capabilities like HVAC service into their wheelhouse.

The Customer Component

According to Conway, the most successful M&As consider the needs of both companies’ customers. Today’s customers prefer the status quo from their fuel companies, such as seeing the same driver pull up for a delivery or talking to the same CSR whenever they call in. That’s why, when merging companies, the priority should always be mitigating change for customers. This requires careful planning and a solid long-term strategy to pull off, but according to Conway, it’s worth it.

The Top Three Takeaways for Mergers and Acquisitions: