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6Reasons Investors Are
Eyeing Middle-Market Oil
& Gas Companies Today
I By David Mahmood
f you own a successful, middle- privately-held businesses, are getting though there was plenty of M&A capital
market oil and gas (O&G) company, better valuations when selling their available to invest. Sellers had fewer
investors want to talk with you. company than ever before.” options, and buyers suddenly enjoyed
While the economy has seen a slow more leverage.
and steady recovery, the O&G industry If you own a middle-market O&G
has witnessed exponential growth business (annual revenues of $25 million Today, our economy is slowly but
over the same time period. This factor, to $500 million), now is a great time to surely on a path of recovery and so
combined with the continued demand review your options with an experienced are profits of middle-market O&G
for fossil fuels and advances in O&G O&G investment banker. companies. Those same businesses look
technology, has placed middle-market good to investors, as profits are up and
O&G companies squarely in the bull’s- But why are investors eyeing middle- economic uncertainty is yielding to a
eye for eager investors. market O&G businesses today? restored confidence in the recovery.
Sellers once again have more options
This same set of market realities, The Economy and leverage is on their side. As market
combined with growing interest in conditions continue to improve, more
O&G companies within the mergers Prior to 2009 (before the Great Reces- investors have been willing to loosen up
and acquisitions (M&A) market, sion), middle-market O&G companies their purse strings and get in the game.
equates to new opportunities for O&G were enjoying rapid growth associated
business owners. Growing demand for with rising oil prices and an associated Information is power, and while
established, successful companies has demand for related services. Business economic growth is fueled by optimism,
increased competition among investors, owners were not interested in selling market sentiments are fueled by statistics.
resulting in a pool of buyers who are because life was great as they focused The April 2014 Bureau of Labor and
willing to pay more now than any other their attention on what seemed to be Statistics jobs report indicates both sus-
time in recent history. endless opportunity! tained growth and a budget deficit that
hovers at a seven-year low accompanied
According to Shama Kabani, CEO of The O & G market experienced first- by home prices that have risen for the past
The Marketing Zen Group and a Forbes hand what Sir Isaac Newton quantified 24 consecutive months. We have a way to
contributor, “Recently, one such emerg- in 1687: what goes up must come down. go to full recovery, and yet, investors are
ing trend has caught my eye—more The industry tanked along with the rest already confident that now is the time
businesses, especially middle-market, of the economy. The world was inverted to be investing in this particular sector.
in the 2000s, and fewer businesses
looked desirable to investors, even
24 NBIZ ■ August 2014
