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How to Value a Fuel Oil Business

#2Fuel
#2Fuel Member Posts: 5
Hey Guys,



Anyone have any experience in buying or selling a fuel oil company? How do you value the business? I have about 150 full service automatic oil customers, 30 "call" accounts. 80% residential 20% commercial. Any help is appreciated. Thanks.

Comments

  • STEVEusaPA
    STEVEusaPA Member Posts: 5,692
    Most likely scenerio...

    You wont get much. Most larger companies are hurting this year, which would make you think they would want to grow through acquisition. Most larger companies will try to buy your business based on a 'retained gallons' basis, about 40-50 cents per gallon, paid out over a few years, blah blah blah....  Of course you couldnt buy THEIR business for that low amount of money.  General guidlines, that your accountant would probably subscibe to would be: priced at one year's gross profit, or 3x one years net profit. Your best bet is to call a business broker who specializes in the petroleum business.  Check Fuel Oil News.  They have articles about this, and usually ads from the brokers.

    If you do happen to get a good price.....let me know....they can buy mine too..lol
    steve
  • chapchap70
    chapchap70 Member Posts: 139
    Rent to own?

    Where is the business located?  Did you ever think of getting someone to pay a percentage of profits for a few years instead of selling to the big boys?  This would bring continuity to your customers if the person that works the business has similar values to yours.
  • Jack
    Jack Member Posts: 1,046
    With the right PERSON

    this can work. With the wrong person, well....! If you are interested in turning the business as mentioned before, you need professional advise. Start with your accountant and lawyer and have them talking so you can get the advise you need. LOTS of implications for taxes, liability, etc
  • #2Fuel
    #2Fuel Member Posts: 5
    Very delicate experience

    My business is located in NYC. I am trying to get a rough estimate of what the business is worth without going to the brokers and risking word getting out that I am looking to sell. (we all know how small this industry is) I once tried to sell about 10 years ago. The potential buyer had me break down all of my accounts and then assigned a cent price for each category.



    For instance:

    300 full service residential automatic accounts = 300,000 gals @ .60 cents per gal.

    100 full service commercial residential accounts = 200,000 gals @ .50c per gal;

    50 call residential accounts = 50,000 gals @.30c per gal ......... and so on......



    That was 10 years ago, I do not know if the cents per gallon from 2000 still apply today. I was hoping someone on this forum might have recently gone through this process and could update those numbers. Then all I would have to do is break down my company accounts into categories and apply the 2012 cents per gallon numbers.
  • Robert O'Brien
    Robert O'Brien Member Posts: 3,451
    Is that 150?

    150 accounts or 1500?
    To learn more about this professional, click here to visit their ad in Find A Contractor.
  • #2Fuel
    #2Fuel Member Posts: 5
    150 or 1500

    I was looking for an estimate. My actual customer number is somewhere between 600 - 800.
  • Robert O'Brien
    Robert O'Brien Member Posts: 3,451
    To learn more about this professional, click here to visit their ad in Find A Contractor.
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