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How can buyers become preferred acquirers of supermajor oil and gas companies’ divested assets?
The supermajor oil and gas companies—the six largest publically traded players in the energy industry—have divested high volumes of assets in recent years, a situation industry analysts believe will continue. This sell-off offers well-positioned buyers the opportunity to capitalize on the divested assets.
In this point of view, we discuss the characteristics of the right acquirers and the four strategies companies can adopt to become the preferred acquirer.
The six supermajor oil and gas companies have sold assets at an unprecedented scale in the past few years, a trend driven by numerous factors. Downstream, they continue to shift their portfolios from regions with slow or negative growth prospects—principally, Europe and North America—to rapidly expanding areas such as Asia. Upstream, they seek new opportunities that combine technological advantages with manageable political risk.
Recent announcements suggest that supermajor divestiture activity will remain high in the future—various analysts project that these players will divest in excess of US$50 billion over the next few years.
Buyers can pursue four strategies to become the preferred acquirer:
Create confidence by adopting a rigorous process: Companies can use the transaction process not only to assess the asset for sale and determine price but also position itself in a positive way. A professionally managed process should take into account the seller’s needs that increase the seller’s confidence in the buyer’s ability to take on the asset with minimum disruption.
Offer a fast closing: For the seller, a fast closing typically means it can put money in the bank sooner. It provides evidence that the seller’s remaining operations will spend less time in the “limbo” that exists between signing and the close.
Prepare for a clean separation: A buyer that offers a clean separation without transitional service agreements has a clear advantage over one that does not.
Be flexible to the seller’s needs: This can help the buyers differentiate themselves in the process, and accelerate contract signing and reduce close-window risks.
May 14, 2014
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