Matrix Capital Markets Group, Inc. is an independent, advisory focused, privately-held investment bank. Since 1988, Matrix has provided merger & acquisition and financial advisory services to privately-held, private-equity owned and publicly traded companies.
Situation
E.J. Pope & Son, Inc. (“EJP” or the “Company”) operated a leading petroleum marketing, convenience retailing, and QSR business in eastern North Carolina.
EJP was founded in 1919 as a coal hauling business by horse-drawn wagon. The Company opened its first convenience store, operating under the Handy Mart store brand, in 1975 in Mount Olive, NC. In 1994, the Company began co-branding stores with nationally recognized foodservice brands in order to enhance the store offerings.
Under the leadership of President E.J. “Judson” Pope III, the Company grew into a highly recognized regional chain of 36 convenience stores with 21 co-located branded QSRs or proprietary foodservice offerings situated across eastern North Carolina.
The Company, via its sister entity Pope Transport, also hauled its own fuel and acted as a common carrier for other third-party hauling customers.
Previously, in 2012, the Company engaged Matrix to divest certain non-core assets. EJP then reengaged Matrix in 2021 to market the entirety of its convenience store business so that the shareholders could focus on the Company’s other businesses and diversify their family wealth.
The shareholders desired to execute a post-closing hauling agreement with the acquirer in order to generate a revenue stream for Pope Transport.
Objective
To customize, execute, and complete a confidential sale process that would allow the Company’s shareholders to realize maximum after-tax value upon the sale of the convenience store business, while also generating considerable income through the execution of a hauling agreement.
Solution
Matrix provided merger and acquisition advisory services to EJP, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction.
Multiple competitive offers were received, and GPM Investments, a wholly owned subsidiary of ARKO Corp (Nasdaq: ARKO), was ultimately selected as the acquirer.
Matrix assisted in the negotiation of the purchase agreement and coordinated the due diligence and closing process.
The transaction with GPM Investments closed in November 2021.
Situation
Jacksons Food Stores, Inc. (“Jacksons” or the “Company”) owns, operates, and supplies more than 1,340 stores across nine western states. The Company is vertically integrated, with fuel supplied by Jacksons Energy, full-line grocery and supplies distributed through Capitol Distributing and fresh food products supplied through Capitol Kitchen.
Pursuant to 7-Eleven’s acquisition of Speedway from Marathon Petroleum Corp., the Federal Trade Commission (FTC”) required 7-Eleven to divest 293 locations.
Jacksons approached Matrix during the fourth quarter of 2020 regarding the potential acquisition of Speedway divestiture assets.
The Company was interested in the Western package of the Speedway divestiture, which included 62 Speedway and 7-Eleven branded convenience stores in California, Arizona and Nevada (“the Portfolio”).
Objective
Matrix was engaged to advise Jacksons on the valuation of the Portfolio, assist in the development of operating and financial assumptions, structure and negotiate the terms of the Company’s offer and review and advise on financing alternatives.
Solution
Matrix developed a comprehensive financial model to evaluate the acquisition and to analyze the projected post-acquisition performance of the Portfolio. The financial model’s many variables allowed the Company to easily perform sensitivity analyses on unique scenarios for the Portfolio and to estimate returns on equity using different operating and financial assumptions.
Matrix assisted Jacksons in preparing its formal offers for the Portfolio and in preparing materials regarding the acquisition for the Federal Trade Commission.
Matrix also advised on the terms of financing utilized to consummate the transaction.
Jacksons closed on the purchase of the final store in the 62-store Portfolio on October 4, 2021.
The successful acquisition is part of a continued focus for Jacksons on growth and expansion into additional markets across the Western U.S. and resulted in the Company gaining 58 stores in attractive California markets, where it had little or no presence prior to the transaction.
Situation
The Spencer Turbine Company (“Spencer”), founded in 1892 and headquartered in Windsor, CT, is a complete designer and manufacturer of air and gas handling systems for industrial, municipal, commercial, and institutional customers requiring blower or vacuum applications.
In 2007, the Company was acquired by Alliance Holdings, Inc., who successfully completed acquisitions and subsequent divestitures of multiple subsidiaries, all while helping Spencer grow into one of the most qualified manufacturers of air and gas handling equipment in the world.
Objective
Matrix was retained by Alliance Holdings, Inc. to sell 100% of the Company with a goal of maximizing proceeds and positioning the Company and its management team for future growth.
Impediments
Legacy legal issues and divestment decisions created obstacles for structuring a transaction that optimized value and minimized risk for all parties.
Spencer’s management team, particularly its finance leadership positions, experienced significant turnover in the years leading up to closing. This resulted in certain financial inconsistencies that had to be navigated during the marketing and Quality of Earnings processes.
Beginning in early 2020, the Company had significant business disruptions resulting from the COVID-19 pandemic. The effects of such, which included employee furloughs, supply chain disruptions, and softened financial results, persisted through the date of closing.
Spencer’s operations had multiple characteristics that limited the potential buyer universe, including ongoing asbestos litigation, a defined benefit retirement plan, a decade-plus lease for its primary manufacturing facility, and deferred capital expenditures, among others.
Solution
Matrix presented normalized financial performance using a data-driven COVID adjusted EBITDA, which was ultimately used to value the business and help maximize proceeds.
All potential transactional hurdles were discussed with the ultimate buyer prior to diligence to help streamline the closing process and eliminate surprises while under exclusivity.
Situation
Lykins Companies, Inc. (“Lykins” or the “Company”), founded in 1948, was a leading distributor of diversified energy solutions to customers located throughout the Midwest, Mid-Atlantic, and Southern United States.
The Company operated through three distinct business lines: a commercial fuels, heating oil, & propane business (collectively “Bulk Fuels”); a wholesale and branded fuels business; and an electricity business. The Company’s assets included 25 bulk plants, ~125 consignment or open dealers, ~30 fuel transports, and ~100 tank wagon units.
After growing the Company both organically and through acquisitions, the Company’s shareholders contacted Matrix regarding their desire to exit the industry in order to diversify their wealth into other business and charitable ventures.
Objective
To customize, execute, and complete a confidential sale process in a way that would allow the Company’s shareholders to realize maximum after-tax value upon the sale of the Company’s Bulk Fuels, wholesale and branded fuels, and electricity businesses.
Solution
Matrix provided Lykins with merger and acquisition advisory services, which included valuation advisory, marketing the business through a confidential, structured sale process, and negotiation of the transactions.
Multiple offers were received for each business line, and the Company ultimately decided the greatest after-tax proceeds could be achieved through a three-part sale process.
Affiliates of World Fuel Services Corporation (NYSE: INT) acquired the Bulk Fuels business. The wholesale and branded fuels business was acquired by Colonial Oil, a subsidiary of Colonial Group, Inc. The electricity business was acquired by Shipley Choice, LLC, a subsidiary of Shipley Energy, Inc.
Matrix assisted in the negotiation of three separate asset purchase agreements and coordinated the due diligence processes and the multiple closings.
The transaction with Shipley Energy closed in January 2021, the transaction with Colonial Oil closed in April 2021, and the transaction with World Fuel Services closed in October 2021.
Situation
Mercury Fuel Service, Inc. was a second generation, privately held company headquartered in Waterbury, Connecticut. Brothers Michael Devino, Jr., President, Martin Devino, Chief Financial Officer, and Thomas Devino, Vice President, helped to significantly grow the retail gasoline business by pursuing desirable real estate, going to market with an aggressive pricing strategy, and offering consistent and high-quality service to their customer base.
The Company grew to 20 company operated convenience retail stores and over 30 wholesale dealer accounts. The company operated stores were all located in Connecticut and sold the Company’s proprietary branded fuel, Price Cutter, as well as Sunoco, Mobil, Gulf and Citgo branded fuel. The wholesale business served dealer accounts in Connecticut, Massachusetts and New York.
Matrix was initially retained to perform a valuation of the Company. After considering the likely valuation range that could be achieved, the Devino brothers decided it was time to sell the Company and exit the industry, at which time Matrix was engaged to manage the sale process.
Objective
To customize, execute, and complete a confidential sale process in a way that would allow the Devino family to realize maximum after-tax value upon the sale. If possible, the Devinos wanted to retain key real estate assets in a sale and lease that real estate to a strong credit tenant.
Solution
Matrix provided merger and acquisition advisory services to Mercury, which included valuation advisory, marketing the business through a confidential, structured sale process, and negotiation of the sale and lease transactions.
Multiple offers were received, and ultimately it was determined that maximum value for the shareholders could be achieved by selling the Company to two different buyers. Eight of the stores were sold to EG Group, while the remaining 12 stores and wholesale dealer business were sold to Sam’s Food Stores.
Matrix advised on the negotiation of the asset purchase agreements, coordinated the due diligence processes, and structured the post-closing lease agreements for certain real estate properties the brothers retained.
The transaction with EG Group closed in May 2021 and the transaction with Sam’s Food Stores closed in September 2021.
Situation
Sherman V. Allen, Inc. (Sherman V. Allen or the “Company”) was founded in 1979 when Sherman “Mac” V Allen, Jr. opened a single store in Fair Haven, Vermont.
In the early 1980s, Mac purchased a local fuel business and started his own distribution company. Over the course of the next decade, Mac purchased other small fuel businesses, and quickly expanded operations into New York, New Hampshire, and Massachusetts.
The Company also diversified by opening a chain of specialty grocery stores throughout Vermont, leveraging the Mac’s Market tradename.
Matrix was engaged to perform a valuation of the Company and advise on a sale process. Jennifer Allen ultimately decided to divest the Company’s convenience stores to diversify family wealth and focus on grocery operations and other real estate opportunities.
Objective
To customize, execute, and complete a confidential sale process that would allow the Allen Family to realize maximum after-tax value upon the sale of their petroleum marketing and convenience retailing business.
Solution
Matrix provided merger and acquisition advisory services to Sherman V. Allen, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction.
Multiple competitive offers were received, and Global Partners, LP (NYSE: GLP) was ultimately selected as the acquirer.
Matrix assisted in the negotiation of the purchase agreement and coordinated the due diligence and closing process.
The transaction with Global Partners, LP closed in August 2021
Situation
Circle K Stores Inc., wholly owned by Alimentation Couche-Tard, Inc. (TSX: ATD.A, ATD.B), operated a portfolio of 49 stores in and around the Oklahoma City metro area.
The Company sought a complete strategic exit from this market as part of its network optimization initiative, which would allow it to focus on core markets and efficiently allocate capital investment in regions that meet the Company’s strategic and brand objectives.
Objective
To customize, execute, and complete a confidential sale process that would allow the Company’s shareholders to realize maximum after-tax value upon the sale of the Oklahoma City assets.
Solution
Matrix provided merger and acquisition advisory services to Circle K, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction.
Multiple competitive offers were received, and Casey’s General Stores, Inc. (NASDAQ: CASY) was ultimately selected as the acquirer.
Matrix assisted in the negotiation of the asset purchase agreement and coordinated the due diligence and closing process.
The transaction with Casey’s closed in June 2021.
Situation
Freeman Gas and Electric Co., Inc. (“Freeman,” “Freeman Gas,” or the “Company”) was founded in 1936 in Spartanburg, South Carolina. Originally a modest, single-location appliance dealership, Freeman grew to be one of the nation’s premier full-service propane retailers under the leadership of third-generation operator J.R. “Rob” Freeman III.
The Company, known for its full-service offerings ranging from retail propane sales, service, and installation to a full line of propane appliances, operated 23 showroom locations throughout North & South Carolina, Georgia, and Tennessee. With logistical support from its 38 bulk plant locations, Freeman served a diverse customer mix in this geography comprised of ~67,000 residential, commercial, agricultural, and forklift accounts in 86 counties.
Matrix was retained to perform a valuation of the Company and to advise on a possible sale process. Rob Freeman and the Company’s shareholders elected to exit the industry and diversify the family’s wealth.
Objective
To customize, execute, and complete a confidential sale process that would allow the Company’s shareholders to realize maximum after-tax value upon the sale of Freeman Gas, while also retaining certain key real estate assets and initiating a lease relationship with the buyer.
Solution
Matrix provided merger and acquisition advisory services to Freeman, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction. The sale process included a buyer pool of privately owned, regional and national propane marketers; and large, public companies including MLPs.
Multiple competitive offers were received, and Superior Plus Energy Services, Inc. (“Superior”) (TSX: SPB) was ultimately selected as the acquirer.
Matrix assisted in the negotiation of the asset purchase agreement, coordination of the due diligence process, and structuring the post-closing lease agreements between Freeman and Superior.
The transaction with Superior closed in June 2021.
Situation
Mercury Fuel Service, Inc. was a second generation, privately held company headquartered in Waterbury, Connecticut. Brothers Michael Devino, Jr., President, Martin Devino, Chief Financial Officer, and Thomas Devino, Vice President, helped to significantly grow the retail gasoline business by pursuing desirable real estate, going to market with an aggressive pricing strategy, and offering consistent and high-quality service to their customer base.
The Company grew to 20 company operated convenience retail stores and over 30 wholesale dealer accounts. The company operated stores were all located in Connecticut and sold the Company’s proprietary branded fuel, Price Cutter, as well as Sunoco, Mobil, Gulf and Citgo branded fuel. The wholesale business served dealer accounts in Connecticut, Massachusetts and New York.
Matrix was initially retained to perform a valuation of the Company. After considering the likely valuation range that could be achieved, the Devino brothers decided it was time to sell the Company and exit the industry, at which time Matrix was engaged to manage the sale process.
Objective
To customize, execute, and complete a confidential sale process in a way that would allow the Devino family to realize maximum after-tax value upon the sale. If possible, the Devinos wanted to retain key real estate assets in a sale and lease that real estate to a strong credit tenant.
Solution
Matrix provided merger and acquisition advisory services to Mercury, which included valuation advisory, marketing the business through a confidential, structured sale process, and negotiation of the sale and lease transactions.
Multiple offers were received, and ultimately it was determined that maximum value for the shareholders could be achieved by selling the Company to two different buyers. Eight of the stores were sold to EG Group, while the remaining 12 stores and wholesale dealer business were sold to Sam’s Food Stores.
Matrix advised on the negotiation of the asset purchase agreements, coordinated the due diligence processes, and structured the post-closing lease agreements for certain real estate properties the brothers retained.
The transaction with EG Group closed in May 2021 and the transaction with Sam’s Food Stores closed in September 2021.
Situation
Toms Sierra Company, Inc. (“Sierra” or the “Company”) operated a leading petroleum marketing and convenience retail chain outside of Sacramento, California. The Company’s stores operated under the Sierra Express brand name, which pays homage to their location in the foothills of the Sierra Nevada mountain range.
After initially presenting the Company’s board of directors with a general market and valuation update of the downstream energy and convenience retail sector in 2017, Matrix continued to brief Sierra on market dynamics and Matrix’s continuous activity within the sector.
After Matrix’s thorough analysis of the business, Matrix met with the Board to discuss the likely valuation range for the assets and a potential sale process. Sierra’s Board decided it was time to sell the Company to provide liquidity to the Company’s majority shareholder.
Objective
To customize, execute, and complete a confidential sale process that would allow Sierra’s shareholders to realize maximum after-tax value upon the sale of the Company.
Solution
Matrix provided merger and acquisition advisory services to Sierra, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction.
Multiple competitive offers were received, and 7-Eleven, Inc. was ultimately selected as the acquirer. As part of the transaction with 7-Eleven, Sierra’s fee simple real estate interest at certain properties was simultaneously sold to an institutional real estate investment trust (REIT) that entered into a long-term lease agreement with 7-Eleven.
Matrix assisted in the negotiation of the asset purchase agreements with 7-Eleven and the REIT and the negotiation of the lease agreement between 7-Eleven and the REIT. Additionally, Matrix coordinated the due diligence and closing processes. The transactions with 7-Eleven and the REIT closed in June 2021.
Situation
Van Unen/Miersma Propane, Inc. (“VMP” or the “Company”), headquartered in Ripon, California, is one of the Central Valley’s largest suppliers of propane, serving over 11,500 customers across 15 counties.
VMP was founded in 1993 by Rick Van Unen, Marion Miersma, and Jeff Van Groningen with the purchase of two bobtails, 300 tanks, and not one customer. The Company grew at an exponential rate through organic growth, as well as the acquisitions of Sierra Propane (2000) and the assets of Hurts Propane (2006, rebranded as Windmill Propane).
The Company developed into one of California’s premier propane retailers with eight bulk plants, three trade names, and a diverse customer base of agricultural, commercial, residential, and wholesale customers.
Matrix was retained to perform a valuation of the Company and to advise on a sale process. Ultimately, the shareholders decided to sell the business to diversify their wealth and focus on other ventures.
Objective
To customize, execute, and complete a confidential sale process in a way that would allow the shareholders to realize maximum after-tax value upon the sale of the Company.
Solution
Matrix provided VMP with merger and acquisition advisory services, which included valuation advisory, marketing the business through a confidential, structured sale process, and negotiation of the transaction. The sale process included a buyer pool of privately owned, regional and national propane marketers, large, public companies, and private equity firms.
Multiple competitive offers were received for VMP, and Energy Distribution Partners, LLC (“EDP”) was selected as the acquirer.
Matrix assisted in the negotiation of the asset purchase agreement and coordinated the due diligence and closing process.
The transaction with EDP closed in May 2021.
Situation
Walker Magnetics Group, Inc., headquartered in Windsor, CT, is a globally recognized manufacturer of highly engineered industrial magnetic products.
The Company was founded in 1896 in Worcester, MA and has grown over the past century through a mix of acquisitions, product innovations, and share gains with its loyal customer base.
In 2011, the Company partnered with Alliance Holdings, Inc. and currently operates out of two locations in Columbus, OH and Windsor, CT. The business has served thousands of customers across the heavy lift, workholding, separation, scrap, standard lift, and repair markets.
Objective
Matrix was retained by Alliance Holdings, Inc. to facilitate a full divestiture of the Walker Magnetics Group, Inc. business from its parent company, The Spencer Turbine Company.
Solution
Matrix tailored a process that streamlined the complexities involved with a typical carve-out situation and identified several interested parties that submitted bids.
Successfully negotiated with a private equity backed strategic buyer, Industrial Magnetics, Inc., to acquire substantially all the assets of Walker Magnetics Group, Inc. and quickly extract the Windsor location from The Spencer Turbine Company’s facility.
Matrix provided guidance and insight for the executed Transition Services Agreement that allowed Alliance Holdings, Inc. to receive additional cash flows post-closing.
Situation
ASAP Expediting & Logistics, LLC (“ASAP”) is an asset-light, third-party logistics business that specializes in expedited freight solutions for customers requiring reliable, time-critical shipping services in the United States and internationally.
ASAP was founded in 2008 in Columbia, SC by Garland Hobgood, who was the sole operator at the time. The Company has since grown into a widely respected family business that serves thousands of customers across the aerospace, industrial, automotive, food and beverage markets.
Driven by its impressive market reputation, customer service focus, and enviable 40%+ profit margins, the Company received inbound interest from several eager transportation and logistics acquirers that ultimately led to the owners seeking a dedicated transaction advisor.
Objective
In an effort to propel ASAP through the next phase of growth, Matrix was retained to conduct a broad sale process and identify the ideal acquirer, with a particular interest in partnership and the ability to maintain active operating roles to help the business realize its full potential.
Solution
Matrix launched a broad process to roughly 700 potential suitors and closed the transaction at premium valuation above client expectations in five months.
Multiple reputable finalist acquirers conducted complete financial diligence pre-exclusivity, which eliminated potential purchase price adjustments and allowed for an expedited closing three weeks from signing a letter of intent.
Matrix coordinated the creative transfer of business data to a broad buyer universe in order to preserve confidentiality and ASAP’s competitive advantage in a highly fragmented market.
Situation
R.M. Parks, Inc. (RM Parks or the “Company”) was founded in 1969 when R.M. Parks sold his family’s ranch and purchased a small Texaco distributorship that sold fuel to 12 Texaco stations and approximately 35 agricultural accounts.
R.M., along with Tim Callison, President & CEO, expanded the business to sell gasoline, diesel fuel, motor oil, lubricants, and automotive products. Tim and his son Jason Callison, Chief Operating Officer, further expanded the business in 1996 with the addition of the Shell brand and quickly became one of the largest Shell wholesalers on the West Coast. The Company supplied more than 160 Shell, Philips, Valero, Sinclair and Spirit branded customers, as well as unbranded fuel to a sizable non-contract customer base with its proprietary transportation fleet.
In 2018, the Company expanded wholesale operations into Mexico where it became the exclusive distributor of two major U.S. brands.
Matrix was engaged to perform a valuation of the Company and advise on a sale process. Tim Callison and his family ultimately decided to divest RM Parks’ U.S. petroleum distribution business to diversify family wealth and focus on Mexican operations.
Objective
To customize, execute, and complete a confidential sale process that would allow the Callison Family to realize maximum after-tax value upon the sale of their U.S. wholesale petroleum distribution business.
Solution
Matrix provided merger and acquisition advisory services to RM Parks, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction.
Multiple competitive offers were received, and PacWest Energy, LLC (a joint venture between Jackson Energy and Shell Oil Products US) was ultimately selected as the acquirer. Valero Energy Corporation exercised its right of first refusal on the Company’s Valero branded assets.
Matrix assisted in the negotiation of the purchase agreement and coordinated the due diligence and closing process.
The transaction with PacWest closed in December 2020 and Valero closed in February of 2021.
Situation
Pester Marketing Company (“Pester” or the “Company”) was acquired by the current shareholder group in May of 2016 as a spin-off from World Fuel Services Corporation (NYSE: INT).
Headquartered in Denver, Colorado, Pester is one of the largest operators of convenience stores in the Front Range corridor with stores that span Colorado, Kansas, New Mexico, and Nebraska.
Following a series of acquisitions, Pester more than doubled its store count to 106 locations in less than three years.
As the ownership group contemplated exiting the investment, Matrix was contacted to discuss strategic planning and provide valuation services. Ultimately, the shareholders decided it was an opportune time to take Pester to market.
Objective
To customize, execute, and complete a confidential sale process that would allow the Company’s shareholders to realize maximum after-tax value upon the sale of Pester or its assets and to minimize post-closing liabilities to the seller by way of representation and warranty insurance, as well as pollution legal liability insurance.
Solution
Matrix provided merger and acquisition advisory services to Pester, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction.
Multiple competitive offers were received, and CF H33 LLC, a new joint venture between Fortress Investment Group LLC, a leading global investment manager, and a subsidiary of Phillips 66 Company (NYSE: PSX), was ultimately selected as the acquirer.
Matrix assisted in the negotiation of the asset purchase agreement and coordinated the due diligence and closing process.
The transaction with CF H33 LLC closed in January 2021.
Situation
Penn Tank Lines, Inc. (“Penn Tank Lines”) approached Matrix during the second quarter of 2020 regarding a potential acquisition of Stardust Transportation, LLC (“Stardust”), a leading aviation gasoline and jet fuel transportation company based in Fishers, Indiana.
Over the last two decades, under the leadership of Tom Harris, Stardust has grown into one of the largest and most reliable specialty fuel transportation providers in the country. Stardust serves primarily airline, airport, and government customers throughout the Midwest, Texas, and Florida.
Penn Tank Lines targeted the acquisition of Stardust to leverage their bulk petroleum and flatbed transportation business and diversify further into aviation fuels transportation in existing and new markets.
Objective
Matrix was engaged to advise Penn Tank Lines on the valuation of the acquisition opportunity, assist in the development of operating and financial assumptions, provide guidance on the structure and terms of the offer, negotiate the asset purchase agreement, and to assist Penn Tank Lines with securing debt financing for the transaction.
Solution
Matrix developed a comprehensive financial model to evaluate the acquisition and to analyze the projected post-acquisition performance of the consolidated company. The financial model included several unique scenarios that allowed for different operating and financial assumption sets to be utilized in order for Penn Tank Lines to easily perform sensitivity analyses and to estimate returns on debt and equity for the acquisition, which was especially important due to the uncertainty around the recovery of the aviation fuels market from COVID-19 impacts
Penn Tank Lines closed on the successful acquisition of Stardust in December 2020 and was able to secure attractive financing terms as part of the transaction.
Situation
Tri Gas & Oil Co., Inc. (“Tri Gas & Oil”) approached Matrix during the third quarter of 2020 regarding a potential refined fuels and HVAC services acquisition opportunity, based on the Delmarva Peninsula.
The target supplied refined fuels and provided HVAC services to residential, commercial, industrial, and jobber customers. In aggregate, the target’s refined fuels and HVAC service business served ~5,400 customers.
Tri Gas & Oil targeted the acquisition due to their attractive customer base and geographic location relative to Tri Gas & Oil’s existing operations on the eastern shore of Maryland and Delaware, and to substantially grow its Comfort Plus Services division which specializes in the installation and report of HVAC equipment and indoor air quality (IAQ) solutions.
Objective
Matrix was engaged to advise Tri Gas & Oil on the valuation of the acquisition opportunity, to assist in the development of operating and financial assumptions, to provide guidance on the structure and terms of the offer and asset purchase agreement, and to assist Tri Gas & Oil with securing debt financing for the transaction.
Solution
Matrix developed a comprehensive financial model to evaluate the acquisition and to analyze the projected post-acquisition performance of the consolidated company. The financial model included several unique scenarios that allowed for different operating and financial assumption sets to be utilized in order for Tri Gas & Oil to easily perform sensitivity analyses and to estimate returns on debt and equity for the acquisition.
Matrix assisted in preparing a letter-of intent (LOI) offer for the acquisition opportunity and advised on the terms of the asset purchase agreement.
Matrix developed a presentation outlining the key highlights of the acquisition and the projected performance of the consolidated entity post-closing. Alongside Tri Gas & Oil’s management, Matrix presented the financial model to Tri Gas & Oil’s commercial lender to help secure the senior term debt on the most favorable terms possible.
Tri Gas & Oil closed on the transaction in December 2020.
Situation
New West Oil Company, LLC (“New West” or the “Company”) was founded in Glendale, Arizona, by four former employees of Canyon State Oil Company: Tim Genrich (CEO), Ron Reeves (President), Tom Turley (VP Commercial Sales), and Terry Cooney (CFO).
The Company began as a Valvoline distributor and also developed and grew a strong proprietary brand, Ultra Lubricants. In 2013, the Company created New West Environmental, a division that collects used oil from customers and resells it as burner fuel to asphalt and concrete companies. The addition of New West Environmental allowed the Company to offer its lubricant customers a disposal solution for used oil, filters, and coolant, without the need for a separate vendor.
In 2016, New West expanded into Las Vegas with the Valvoline brand and in 2018 also became one of the largest Petro-Canada distributors in the United States.
Over the course of just nine years, New West grew from a one-brand start-up into a leading multi-brand lubricant, commercial fuel, and environmental service provider in the Southwest.
The owners contacted Matrix in order to understand the value of the business in a potential sale.
After presenting the most likely valuation range and recommended sale process with the owners, Matrix was retained to advise on a potential sale process. Ultimately, the Company decided to pursue a sale that allowed it to retain real estate control of its facilities through a subsequent lease to the buyer post-closing.
Objective
To customize, execute, and complete a confidential sale process that would allow New West’s shareholders to realize maximum after-tax value upon the sale of the Company. In addition, the owners’ preference was to maintain real estate control of its facilities and secure favorable post-transaction employment agreements with an acquirer for the owners and other employees.
Solution
Matrix provided merger and acquisition advisory services to New West, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction and leasing of the facilities.
Multiple competitive offers were received, and RelaDyne was ultimately selected as the acquirer.
Matrix assisted in the negotiation of the purchase agreement, coordinated the due diligence, structured proposed facility lease terms, and managed the closing process.
The transaction with RelaDyne closed in December 2020.
Situation
Stop-N-Go of Madison, Inc. (“Stop-N-Go” or the “Company”) was founded in 1693 by Duane and Olympia Bowman with a focus on operating neighborhood grocery stores. In the 1980s, Stop-N-Go underwent a strategic initiative to transform the portfolio into a convenience store chain with a motor fuels offering.
Under the leadership of Andrew Bowman, President and fourth generation of family ownership, Stop-N-Go continued to grow into one of the leading convenience store brands in southern Wisconsin and northern Illinois, which primarily marketed BP branded fuels.
The Company operated 36 convenience stores, 26 of which were controlled fee simple.
Matrix was engaged to perform a valuation of the Company and advise on a sale process. The shareholders ultimately decided to exit the retail convenience store and petroleum marketing business to diversify family wealth and focus on other ventures.
The operating companies and real estate holding company were all C-Corporations, and they also owned real properties that were unrelated to the Stop-N-Go business.
Objective
To customize, execute, and complete a confidential sale process that would allow the Company’s shareholders to realize maximum after-tax value upon the sale of Stop-N-Go or its assets.
Solution
Matrix provided merger and acquisition advisory services to Stop-N-Go, which included valuation advisory, marketing of the business through a confidential, structured sale process, and negotiation of the transaction.
Due to client preferences, Kwik Trip, Inc. was approached on a pre-emptive basis, although Matrix was prepared to launch a broader marketing process to a pool of established, credible prospective buyers.
Matrix assisted Stop-N-Go and their tax advisors to understand the tax implications of various transaction scenarios and negotiated the allocation of purchase price with Kwik Trip to maximize after tax proceeds to the shareholders.
Matrix assisted in the negotiation of the purchase agreement and coordinated the due diligence and closing process.
The transaction with Kwik Trip, Inc. closed in December 2020.
Situation
The Montana Children’s Home and Hospital d/b/a Shodair Children’s Hospital (“Shodair”) is the largest not-for-profit dedicated behavioral healthcare services provider in Helena, MT and served patients from 44 of Montana’s 56 counties in 2019.
Shodair offers a robust continuum of pediatric psychiatric care, including 30 inpatient psychiatric beds for children ages 3-18, a 42-bed psychiatric residential treatment facility, therapeutic group homes, outpatient, day treatment, and school-based services.
In addition, Shodair offers the State’s only comprehensive genetics program.
Objective
As part of its long-term growth strategy, Shodair worked with a team to design a new facility that would be suitable for the organization’s expanded pediatric psychiatric service lines and level of high-quality care. The new facility design includes 82 private rooms and an environment dedicated to safety, hope, and healing.
Shodair hired Matrix to serve as Financial and Municipal Advisor to develop and implement a Plan of Finance to pay for construction of the new hospital facility.
Solution
In assisting Shodair in developing the Plan of Finance, we worked with the Management Team to determine the appropriate level of debt to finance the construction, in addition to analyzing various different potential financing options.
We guided Shodair through the Rating Agency process with Standard & Poor’s and they achieved a BBB- rating with a Stable Outlook.
In conjunction with the working group, we developed a set of financial covenants and manageable continuing disclosure requirements.
Ultimately, through the Montana Facility Finance Authority, Shodair issued $32,735,000 of Series 2020A Bonds on its own credit, in addition to $20,000,000 of Series 2020B Bonds with the support of the Montana Board of Investments.
Overall, Shodair’s all-in cost of capital is 3.41% with a final maturity of 2050.
Situation
Dixie Gas & Oil Corporation (“Dixie” or the “Company”), headquartered in Verona, Virginia, was one of the region’s largest independent suppliers of retail propane, heating oil, commercial fuels, and lubricant products serving over 10,000 customers in 17 counties throughout Virginia and West Virginia.
Originally founded as Dixie Bottle Gas Company in 1946, the Company initially focused on propane cylinder exchange services in the post-World War II housing boom. Over the next three decades, Dixie continued to grow its propane business and significantly expanded its other product offerings. Through a number of acquisitions and organic growth, the Company developed into one of Virginia’s premier propane and commercial fuels retailers with five bulk plants, a propane rail terminal, and four retail offices with appliance showrooms.
Matrix was retained to perform a valuation of the Company and to advise on a sale process, including the possibility of a break-up sale to multiple different buyers. Ultimately, the shareholders decided to sell the business to diversify their wealth and focus on other ventures.
Objective
To customize, execute, and complete a confidential sale process in a way that would allow the Dixie family to realize maximum after-tax value upon the sale of Dixie Gas & Oil Corporation.
Solution
Matrix provided Dixie with merger and acquisition advisory services, which included valuation advisory, marketing the business through a confidential, structured sale process, and negotiation of the transaction. The sale process included a buyer pool of privately owned, regional and national propane marketers and refined fuels distributors; large, public companies including MLPs; and a select pool of lubricants-focused distributors. Matrix executed a bifurcated sale process to solicit offers for the entire company as well as each separate division to determine the best path for maximizing value.
Multiple offers were received, including bids for the entire company and bids for only certain divisions. Ultimately, Quarles Petroleum (“Quarles”), who sought to acquire the entire company, was selected as the buyer.
Matrix assisted in the negotiation of the asset purchase agreement and coordinated the due diligence and closing process.
The transaction with Quarles closed in October 2020.
Situation
EnergyUnited Electric Membership Corporation (“EMC”) decided it was time to explore strategic alternatives for its wholly-owned propane distribution subsidiary, EnergyUnited Propane, LLC (“EUP”). Both EMC and EUP are headquartered in Statesville, North Carolina.
EMC serves ~110,000 electric members in central and western North Carolina, making it the second largest supplier of residential electricity in North Carolina.
EUP is one of the largest propane retailers in its region, serving ~29,000 residential and commercial customers throughout 104 counties in North Carolina, South Carolina, and Virginia.
In 2000, EMC founded EnergyUnited Propane, LLC through the acquisition of All Star Gas’s North Carolina markets (Durham, Warrenton, Creedmoor, Carthage, Denver, Gastonia, and Hendersonville), as well as the development of greenfield sites in Lexington, Taylorsville, and Madison, North Carolina. EUP acquired the South Carolina markets of All Star Gas (Aiken and Barnwell) in 2001, and Albemarle Propane, based in Camden, NC in 2007. In 2013, EUP purchased Lake Norman Propane.
Objective
Matrix was retained to customize, execute, and complete a confidential sale process that would allow EMC to realize maximum after-tax value upon the divestment of EUP and redeploy capital into its core, electricity business.
Solution
Matrix provided merger and acquisition advisory services to EMC and EUP, which included valuation advisory, marketing of EUP through a confidential, structured sale process, and negotiation of the transaction.
Multiple competitive offers were received for EUP, and ThompsonGas, LLC was selected as the acquirer.
Matrix assisted in the negotiation of the purchase agreement and coordinated the due diligence and closing process.
The transaction with ThompsonGas closed in September 2020. Post-closing, EMC and ThompsonGas will maintain a coordinated customer marketing effort within EMC’s electric footprint in central and western North Carolina.
