What Are The Challenges In The Energy Broker M&A Space?

Whether you are an energy brokerage firm looking to acquire a competitor or a private equity group in the midst of a roll-up, there are several M&A challenges you might face in the retail energy sector. First and foremost is valuation. With many different sales and customer management models in the space, understanding an organization’s true churn rate is critical to developing a fair valuation.

Next comes risk evaluation. In the current climate, energy markets are extremely volatile, customer drops are more prevalent, and renewals are not always guaranteed. Having the true data at your fingertips to evaluate the risk of each deal is critical to your acquisition efforts. Compiling total customer load forecasts and making certain assumptions can help you determine future cash flows and your downside exposure.

And last but certainly not least comes the transaction. Understanding how to merge systems or import data from one company’s CRM into another’s can be quite challenging. Since each software program tends to store customer data differently, it is vital to have the skills to be able to normalize data in order to remain organized throughout your merger or acquisition. Energy Consulting Services from Edge can help you to do just that Not only can we use our robust platform to aid us in our efforts, but we have also consulted many large organizations through the entire M&A process.