Navigating Propane Mergers & Acquisitions: A Checklist for Owners

You don’t have to search far to find news of mergers and acquisitions (M&A) in the propane industry. Like yours, my newsfeed is filled with headlines, and it’s the talk of the show floor during events season.

Many factors contribute to the consolidation trend in today’s competitive landscape. Changing preferences in heating solutions and regulatory pressures can be challenging, especially for smaller operators. While technology upgrades can significantly enhance operations — and often are a recommended step in the two to three years leading up to business sale discussions — innovation requires an investment that needs to be planned and budgeted.

Additionally, we can’t overlook that many owners and managers are nearing retirement age and seeking exit strategies, which larger national and regional players recognize as a chance to expand market share. M&A impacts aren’t solely on the owner side of things, either. I work at the technology and software innovator, PDI Technologies, which acquired Blue Cow Software in 2023. The PDI acquisition was the third time my company was acquired in a three-year period. (The only 3-on-3 I want to play is pickup basketball!)

I’ve learned a lot going through M&A myself and by helping our customers navigate business changes. Whether you’re considering selling or buying or simply trying to understand the landscape, check out this M&A checklist.

1. Understanding & Trust

Understand how your current market position and revenue streams compare to regional competitors, from revenue stability to operational efficiency, geographic positioning and more. Be honest with yourself about the value your company offers as you prepare for due diligence and negotiations.

Have all parties sign nondisclosure agreements so you can have frank discussions. Work with your own legal counsel (each party should have their own) and solicit support from investment bankers, accountants or other professionals skilled in M&A. Decide the appropriate level of transparency for your leadership team and other employees and develop a comprehensive communications plan that shares the right information at the right time for both internal and external stakeholders.

2. Project Timelines & Flexibility

Speaking of plans, it helps to have a full project plan for all aspects of the transaction and the many milestones leading up to it — as well as what comes next. One way to organize the timeline is across three distinct phases: planning (sourcing and negotiation), due diligence (negotiation to closing) and post-close integration. Identify the key events, the resources required and how long for each phase. This structured approach helps align stakeholders and manage expectations throughout the process.

Then, prepare for the reality check. What do they say about the best-laid plans? Unexpected challenges are likely to arise, including the external impact of market shifts or the internal certainties of integration complexity. Leave room for inevitable hiccups and roadblocks. Also, emphasize flexibility and agility with yourself, your team and across the aisle. Expect some level of business disruption no matter how well you plan and execute. Remember not only the challenges, but also the significant value, that results from the M&A process.

The propane industry also presents unique seasonal challenges that can impact M&A. Winter heating season preparations can delay integration efforts, while summer’s “slower” periods might seem ideal but often coincide with event or vacation schedules. Build these seasonal considerations into your project plans from the start.

3. Customer Continuity

Preparing for delivery and service continuity for your customers is a key item on the checklist. Whether you’re the acquiring company or the one being acquired, chances are you have a lot of heart for the customers you serve and want to make sure they don’t experience any disruption.

Some questions to consider include whether equivalent products and services are offered, if zones and degree days remain the same, and what branding will look like so customers recognize and welcome the new company on paper, electronically and on the road. Understanding and then having a plan to communicate with your customers is critical to ensuring a smooth and successful transition.

4. Financials & Payments

Getting paid is important. (Isn’t that an understatement!) Make sure your accounts payable, accounts receivable and other financial processes are in place on day one. Once you’ve decided the deal terms and structure, you can plan how to recognize the company and customers and how to sort through specific scenarios that may arise.

One example: Are you recoding or matching service contracts, prompt pay discounts, collection codes, auto hold reasons and payment terms?

Another example: On the balances that come from the acquisition, do you want to keep them as they were in the previous system? Do you want to zero them out? Do you want a hybrid base if a customer has a credit or debit balance?

Branding also comes into play here again, as you want your billing and accounting statements to be recognized by customers and vendors. Also, don’t forget internal finance needs (like payroll) so you can prioritize your team. This is especially crucial during times of business transition like M&A and as you work to align company cultures and emphasize employee retention.

5. Technology

All your technology systems will need to be ready on day one whether you’re transitioning out or bringing in a new entity. If possible, work ahead with your software supplier and look to them for support and best practices when it comes to technology needs like compatibility and data migration. Experienced software leaders are well-versed in helping through transition. They also can be a valuable resource for the training and education of any new employees who may need support in learning systems.

The finance and technology items are closely related when it comes to topics like credit cards. Speak to your current processor vendor about potentially releasing your vaulted tokens to any new software vendor and its processor. This should be an exercise done early in the process so you can begin taking payments on day one.

While there is a lot in the details, taking a big-picture view like that of a checklist can be helpful to start. The decision to merge, acquire or be acquired isn’t one that happens overnight or in a vacuum. Start thinking today about what your business future holds and how to navigate the potential transactions to come. Then, when it is time, think ahead, ask questions and stay nimble. It is the only way to survive in a dynamic — and rewarding — industry like propane.