Commercial Due Diligence for acquisition of a chemicals terminal

Commercial Due Diligence for acquisition of a chemicals terminal

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