Closing the Deal: Valuing and Acquiring a Propane Business Moderator: Steve Abbate M&A Advisory * Business Valuations * Strategic Planning 1

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Steps to a Successful Transaction 1.Find a Company to purchase 2.Value the business 3.Present an offer (LOI) 4.Perform due diligence 5.Execute the closing documents 6.Transition the Company 4

Evaluating the Buyer/Seller Buyer Evaluating Seller Seller Evaluating Buyer 1.Geographical 2.Product Mix 3.Financial Information 4.Human Resources 5.Real Estate/Fuel Storage 6.Growth Opportunities 7.Cultural/Union 1.Financial Capabilities 1.Cash or Earn-out 2.Contingencies 3.Property Purchase/Lease 2.Employees 3.Customers 4.Reputation 5

Valuing Energy Marketer Assets Common financial valuation methods: Multiple of EBITDA (Operating Income) Gross Profit – Adjusted Operating Expenses = EBITDA Distributable Cash Flow or DCF Gross Profit – Adjusted Operating Expenses – Capital Expenditures & Investments = DCF Return on Equity or ROE Net Income divided by initial investment = ROE 6

Key Value Drivers Percentage of company owned tanks Supply and distribution capabilities Exposure to alternate fuel conversions Customer demographics Margin and margin expansion opportunities Supply and demand for the Company assets. What financial valuation methods do you use and what other considerations do you consider when valuing a business? 7

Low Fuel Costs & Value 8

Lower energy costs have supported margin expansion in most areas and resulted in reduced operating expenses. How have lower energy costs effected the value of propane companies? 9

Diversification and Value Many fuel marketers have diversified revenue streams including multiple fuels, HVAC services and other home services. What considerations do you take into account when valuing a diversified business? 10

A Sellers Perspective “If you owned my business you would make more than we do so it should be more valuable to you.” Do you value a business on how much money the company made historically, or do you value on how much money you will make in the future? 11

Due Diligence & Closing Documents The assets have been valued and agreed to. A Letter of Intent has been executed. Now it is time to close the deal. But wait! We still need to get through due diligence and the closing documents. 12

Ralphie's Little Brother 13

Closing the Deal Navigating due diligence and negotiating the final documents are critical times in closing the deal. Can you give our audience some pointers on how to finalize a successful transaction. 15

Questions? Moderator: Steve Abbate M&A Advisory * Business Valuations * Strategic Planning 16