Monday, March 18, 2019
M&A: Many of the best indies may already have been bought
Source: Oil Express
By Bayan RafiHouston - Many of the desirable independents in the retail fuels marketing space have already been purchased, increasing earnings multiples and making the space even more competitive for prospective buyers, said Jeff Kramer, managing director, NRC Realty at CERA Week in Houston on Tuesday.
A low-interest-rate environment is prompting multiple potential buyers to search for acquisition targets at the same time, he said. Recent changes to tax codes under President Donald Trump have also contributed to increased buy-side interest.
"We are in an unusual time where we have very low interest rates, which has already prompted a lot of merger and acquisition activity," Kramer said. "It's gotten quite competitive on the high end, led often by private equity."
Buyers, be they private equity or refiners, are all interested in scale, he added, because all buyers want to become large, quickly.
Opportunities for building retail from scratch still exist, Kramer said, but there are a number of costs and limitations associated with that approach. "Building from the ground up can only happen at a certain pace because of zoning restrictions and you have to make sure you secure the right property," Kramer said.
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