Commercial Due Diligence for acquisition of a chemicals terminal
M&A Transactions - Chemicals
The Engagement:
Commercial Due Diligence for the acquisition for three multiproduct chemical terminals in NWE
The Client:
Private Equity Company
The Challenge:
Assess the commercial viability of the potential acquisition and flag any concerns around the investment decision
Duration:
2 months
Transaction summary
- Reviewed the investment memorandum and management presentation to test the hypothesis and potential value of the investment
- The first phase constituted of a high-level review of the performance of the terminals including:
- Market outlooks for products
- Identifying developing/ declining markets
- Competitive outlook
- Analysed the customer contracts and their supply chain integration with the terminals
- Conducted a market review for storage rates and perception of the target
Outcome
- Energex produced a red flag report to identify concerns about operational performance, and the resulting challenge to maintain utilisation and performance
- Identified the need for high capex spending to fix deficiencies, bottlenecks and issues with distribution
- The client decided not to proceed into the next stage of the acquisition due to the risks highlighted in the Energex report