Ongoing regulation and economic changes in the midstream market make building new assets more challenging. Instead, many companies maximize the potential of current assets through acquisitions and divestitures.

There are three main ways to sell a midstream asset.

Using investment banks to find potential buyers in your network

Investment banks are the typical way to buy and sell midstream assets. Depending on the current state of the oil & gas market, interest rates, and market outlooks, investment banks may not be willing to fund or sell certain assets under or over a specific price range. To meet this threshold, companies bundle assets together to meet the desired threshold or are unable to sell their asset entirely.

Using the internal company network to find a private buyer

Companies may leverage current networks of potentially interested buyers. However, finding private buyers is rare and requires the company to have a pre-existing interested party or an extensive network of contacts. The availability of networks (or lack thereof) creates walled gardens that decrease buyer options and lead to economic inefficiencies. 

Using an online platform to reach over 3,500 qualified buyers ready to purchase the asset

Midstream Holdings is an online buying and selling platform for midstream assets of all sizes, making it the appropriate platform to sell smaller assets investment banks would otherwise bundle or turn away. Midstream Holdings lists and markets the seller’s asset until a viable buyer is found.

Once a company knows how to sell its asset, it must review and qualify the buyers.  

Sellers should ask themselves four questions when qualifying potential buyers:

1. Can the buyer pay a competitive price?
2. Is the buyer made up of an accomplished management team with an operating history relevant to the listed asset?
3. Is the buyer a competitor or associated with any competitor?
4. Does the asset make sense as an addition to the potential buyer’s current portfolio?

Meanwhile, sellers should be weary of potential red flags:

• Companies buying too aggressively can struggle to maintain the asset later on.
• Be wary of the buyers that may not be able to come up with the necessary funds once the purchase stage is reached.
• If buyers aren’t asking questions, be cautious. They may not know how to properly transact or manage the asset.
• Avoid buyers that are interested in your asset with no clear compatibility or synergy with their current portfolio.

There’s never a one-size-fits-all path for transacting your midstream asset. But, by following these tips, you can close a sale with a buyer who is interested, funded, and able to maintain the asset going forward.

Want to list your asset with Midstream Holdings? Contact Matt Duty at mad@midstream-holdings.com or visit https://www.midstream-holdings.com/ to create a free account.