The Oil & Gas sector was one of the hardest-hit sectors last year. However, the industry forecasts show demand will begin to exceed supply in 2021. I had a chance to talk to Gary Papay, our sector lead from North Carolina, to get his insights and outlook for 2021. Watch the full video below.
We’re sensing a resurgence in the Oil & Gas sector at the moment. What are you seeing in the US market?
After last year’s downturn, we’re seeing a pickup this year. Obviously, the price of product is driving that but the economy is bouncing back in the US and around the world. I think you’re going to see a real uptick in demand around the world.
This translates into the sector as well, particularly in the downstream segment of the Oil & Gas sector. The propane distributors, heating oil distributors, other petroleum distributors, lubricants. We’ve seen a lot of activity in that space right now, but not in the upstream. Those guys got hurt pretty bad in the downturn. So it will take awhile before they come back.
That sector is quite dominated by family-owned businesses. What’s your advice to the owners in that sector at the moment?
A lot of the owners in that segment are baby boomers, like many other industries. And it’s important for them to put together an exit plan and to work with an M&A advisor to figure out where they’re going with their business. In time, they’ve got to exit, so planning ahead now is important. With the upturn again, things should be looking a lot better for them from a profitability standpoint. It’s time to really take a hard look and get an idea of where you want to go and how.
How are you seeing the prices that the buyers are willing to pay for companies in those sectors at the moment?
Some are very strong like the propane industry and lubricants, which are very active. The heating oil space is a mature industry, so it’s not as aggressive. Although there are some good regional and local players in that industry as well.
For people who are contemplating selling their business at the moment, what’s the best advice you can give them?
Work with an experienced M&A advisor or somebody who has some experience in the space and let them help you build the business. Set a game plan to exit and as we always say exit at the right time for the maximum value.
If you are in the Oil & Gas sector and have questions about your strategy, you can contact us anytime. Learn more about our Oil & Gas team.
Gary Papay is a Principal at Eaton Square. A professional intermediary and business appraiser specializing in the sale and transfer of privately held mid-market, heating oil, propane, and petroleum companies since 1976. Gary is the partner in charge of IBG’s Pennsylvania and North Carolina offices.