Mergers & Acquisitions

Five M&A Insights from Outlook Leadership

Experts share observations on the “urge to merge”

SCOTTSDALE, Ariz. -- With MLPs bumping out any number of potential bidders for top-tier convenience-stores, finance experts assembled for the initial workshops at CSP’s annual Outlook Leadership conference in Scottsdale, Ariz., this week were privy to nuanced insights on opportunities on either side of the buy-sell equation.

Greg Shoemaker, Matthew Fischer, Jeff Kramer, Jim Fisher, Jim Bosworth, Dennis Ruben CSP Outlook 2015

Panelists ranging from economists to master limited partnership players delivered five separate sessions exploring the channel’s current frenzy of merger-and-acquisition (M&A) activity.

Beyond the slow but improving economy and the MLPs’ impact of record-breaking valuations, here are more subtle observations panelist offered the audience of about 250 early-bird attendees:

  1. Like buys like. While many top-tier assets may appear viable to the current short list of consolidators, Jim Fisher, CEO of IMST Corp., Houston, said buyers often buy assets that are similar to the ones they currently own and operate. He has seen one buyer purchase a large-format convenience-store chain and fail to grow or even maintain its sales and volumes over time.
  2. Smaller acquisitions are happening. Though deals of 100-plus stores make headlines, Fisher said deals are occurring in the single- and double-digit range that just don’t make the news. He recently facilitated a sale of 18 convenience stores and another of seven stores.
  3. Pressure to sell. Beyond the attractiveness of higher multiples that lured some retailers to sell, others are feeling the pressure from oil companies raising their contract requirements or succession plans that don’t exist, according to Jim Bosworth, vice president of real estate and strategic growth for Cary Oil Co., Cary, N.C.
  4. A challenging stock environment for MLPs. Jeremy Bergeron, president of CrossAmerica Partners LP, Allentown, Pa., admitted the fall in oil prices and other factors have pushed MLP stock prices lower, but that CrossAmerica’s structure has buoyed the company and allowed it to stick to the announced distribution range to unitholders of 7% to 9%.
  5. Growth doesn’t just mean store count. Roger Woodman, managing director at Raymond James & Associates, St. Petersburg, Fla., said one client built significant growth in earnings by investing in renovations and raze-and-rebuilt stores.

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