Pennybacker Capital Management, LLC, through its infrastructure investment arm Pennybacker Critical Infrastructure Partners (PCIP), sought to expand its newly formed infrastructure portfolio. A financial transaction was pursued, wherein PCIP acquired an LNG business segment from an Undisclosed Company, producing 8,300 MMbtu per day of LNG uniquely positioned to deliver LNG solutions across the Southeast and Caribbean.
Due diligence services support was necessary to execute the transaction. Leveraging its extensive transaction due diligence experience and energy industry expertise, Opportune provided due diligence services to assist PCIP in delivering a comprehensive quality of earnings report and help calculate the post-close settlement of the purchase price, including various net working capital analyses. Our ability to provide these services gave PCIP the financial clarity and confidence needed for informed internal decision-making during purchase price negotiation.
Prior to the transaction close, Opportune’s transaction advisory team conducted a detailed review of Miami LNG’s carve-out financial statements to ensure completeness, evaluate allocations, and assess cost risks. Once the seller clearly communicated the carve-out methodology of the financial statements, Opportune conducted additional diligence procedures and created a fulsome quality of earnings report documenting accounting policies, EBITDA adjustments, gross margin, capital expenditures, and inventory rollforwards. Through our analysis, we identified issues with the carve-out methodology that ultimately led to a material decrease in valuation and reduction in the purchase price. Our report was made available to PCIP to allow them to understand the assets better and assist them in the underwriting processes.
Additionally, our transaction advisory team performed multiple iterations of net working capital analyses, including line-by-line balance sheet review, assessing aging, normalizing adjustments, etc. After these procedures, a final net working capital report was issued to present to both PCIP and the seller to finalize a post-close purchase price adjustment.
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Opportune can help you navigate the complexities of mergers and acquisitions. Our team of experts provides comprehensive transaction due diligence services, including financial analysis, quality of earnings reports, contract reviews, and risk assessment (including liability identification). We leverage technology and deep industry knowledge to deliver valuable insights into target companies, including their financial performance, operations, compliance, and governance. This allows you to make informed decisions regarding valuation, integration planning, and managing potential risks.
Contact us today to learn how our expertise in transaction due diligence can help you achieve success in your next acquisition.
When you choose Opportune, you gain access to seasoned professionals who not only listen to your needs, but who will work hand in hand with you to achieve established goals. With a sense of urgency and a can-do mindset, we focus on taking the steps necessary to create a higher impact and achieve maximum results for your organization.
