What insights do you need when buying a fuel site or network?
From crises come opportunities. OMV Group has recently announced that its network of fuel sites in Germany is up for sale. With purchases like this (and others like Lotos in Poland) up for grabs, what insights do fuel retailers need to ensure they make smart network investments?
The information provided in advance of a fuel network purchase or acquisition is incredibly limited. A potential buyer might have visibility on volume actuals, and health and safety information, but almost nothing on the sites’ equipment, features, and services in situ.
Why work with an M&A domain expert?
It can be a game changer.
If you already own a network in the market, it’s essential to check how the new sites will fit alongside the existing ones. Is there any potential for cannibalization, and if so, how should you minimize the damage? You’ll also need to present this to the competition authority within that market, which can be a lengthy, painful process without impartial data.
If it’s a first-time network purchase, do you fully understand the quality of the sites you’re buying and what facilities you’re getting? What’s the potential performance of the network from a fuel, c-store, and quick service restaurant (QSR) perspective? Do you know how certain scenarios could positively or negatively impact your revenue?
You probably need a local expert like Kalibrate to identify nuances and opportunities within a market you’re unfamiliar with.
Benefit from extensive consultancy work
When the Esso network was for sale in 2016, Kalibrate did deep, extensive consultancy work for a prospective buyer. We ran hypotheses and modeled potential scenarios to validate opportunities or flag risks with their strategic plans.
Ultimately, we answered the question: are you buying a network with plenty of potential, or is it a waste of your money?
For example, do you fully understand the existing assets and how are they performing relative to the competition? You may be provided with basic sales data, but it may lack context. You need both sales data and market expertise to understand if these numbers are good or bad.
Are you considering changing the branding on the prospective purchase, perhaps? This can have a significant impact on future success, but this will vary from one market to another. You need to run extensive modeling and scenario analysis to predict it.
It’s essential to consider potential future revenue and the scope to make changes to achieve this. For example, potential space to add more pumps. Capacity to improve the offer inside the convenience store. Potential cosmetic changes that could boost your profitability.
Kalibrate’s in-depth PPQ analysis can generate a more holistic view of the site’s or network’s potential so you feel confident in your purchase.
Do you already own a network?
If you’re considering a purchase that brings a new site or collection of sites into an existing network, there are wider implications to consider than just the potential performance of the target site.
Will the new site(s) seamlessly integrate into your existing network, or will it need additional work to bring it in line? Will these new sites take volume away from your existing ones, for example?
Kalibrate’s experts can help you get answers to issues like like:
- Whether new network is a good or bad fit
- What to do if there’s site overlap and potential cannibalization
- If there is competing volume, where to focus attention, and where to divest
- How to make your case to the competition authority — a lengthy, painful process without impartial data.
What if you’re not present in the market?
When considering a site investment, you need to deep dive into the demographics and potential needs of the local population. This includes the size of the population and average income. Is it a transient location or residential? You also want to understand the context of the market, such as how the proposed network’s services and offerings match up to the competition.
Establishing these facts can be incredibly tricky if you’re not present or local to that market. Acting as your domain expert, Kalbrate can ensure you have visibility on:
- Local market knowledge, including the competition, their strengths, and weaknesses
- Any regional differences or nuances in the network for sale
- Ways to improve the network you’re buying
Unfortunately, COVID-19 has exposed business frailties; with 2020’s volatile climate, not all networks are pitched the same to weather the storm. Working with a third party like Kalibrate will ensure your long-term purchase has all the fundamentals to survive future crises.
There are plenty of ways a domain expert like Kalibrate can add value during a potential network purchase. From benchmarking and modeling, giving flexibility to do your own analysis, or in-depth consultancy as part of your due diligence processes — we can fit your needs. If you’re interested in making a network purchase or a site acquisition, request a no-obligation consultation with one of our M&A experts.
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