Frederica Miano of Eurofuels and Dr . Ernst-Moritz Bellingen of en2x energy , participating in a panel with NORA President Michael Devine and NORA Technical Director Dr . Thomas Butcher . Credit Stephen Bennett .

At the Southern New England Energy Conference in Newport , R . I ., the lineup included : Alan Wornham of R . W . Beckett on developments in burner technology ; NORA presentations on renewable diesel and biodiesel ; Paul Nazzaro of Advanced Fuel Solutions on “ The Four Pillars of Bioheat Fuel Industry Success ;” Ed Cobb , a commodities consultant , and NORA Director of Education Bob O ’ Brien , discussing preparations for higher blends of biofuels ; and Frederica Miano of Eurofuels and Dr . Ernst-Moritz Bellingen of en2x energy , participating in a panel with NORA President Michael Devine and NORA Technical Director Dr . Thomas Butcher .

Jeff Simpson , managing member of Notch Capital in Simsbury , Connecticut , was a featured speaker at the Conference , which was held Sept . 23-24 . Simpson delivered a presentation titled , “ Accessing New Sources of Capital for Growth .”

“ We bring capital in to help [ fuels and HVAC ] companies grow through acquisition and other initiatives ,” Simpson said of Notch Capital in an interview after the conference . “ Ever since the pandemic , HVAC has been a hot business line because it ’ s very steady ,” Simpson said . “ During the pandemic , when a bunch of other businesses were effectively closed , the HVAC world just kept humming along .”

Since 2022 , private-equity investors have purchased approximately 800 HVAC , plumbing and electrical companies , The Wall Street Journal reported in October , citing data from PitchBook . The Journal noted that acquisitions of smaller HVAC companies , had they also been tracked , would likely have driven the number still higher .

Simpson set about dispelling some “ myths about private capital ,” specifically that it is difficult for fuels and HVAC companies to access because private investors “ don ’ t like fossil fuels .” If a company ’ s lineup of products and services includes propane and HVAC , then “ a well-run heating oil division with strong service and installation activity can add value ,” Simpson

said in his presentation .

Smaller companies are attracting interest as well , Simpson said , defining “ smaller ” as “ generally , $ 2 million to $ 3 million adjusted EBITDA or higher .”

Some owners worry that striking a deal for private capital means giving up equity and / or control , but “ non-dilutive private debt is also accessible ,” Simpson said , further noting that requirements as to control and governance differ by capital provider .

The cost of private capital is commensurate with risk , Simpson said . “ There are many capital sources looking to put money to work ,” he said . “ If you have prioritized growth via acquisition , keep the larger goal in mind : the creation of value .”

That private equity will gut staff and expenses and “ flip ” the company is another concern of some owners , Simpson said . But many financial buyers “ value the team and look to build upon it ,” he said . According to Simpson , “ 57 % of lower middle market deals last year included a seller equity rollover component , showing that alignment with the seller and industry expertise is valued .”

Simpson emphasized , “ A company ' s ability to access these sources of capital generally kicks in when they reach a certain minimum size — whether as a standalone or via acquisition — of $ 2 million to $ 3 million in EBITDA .”

Jeff Simpson , Notch Capital

EBITDA stands for earnings before interest , taxes , depreciation and amortization . Jeff Simpson can be reached at ( 860 ) 299-3358 and jsimpson @ notchcap . com .

CEMA PODCAST HIGHLIGHTS MEMBERS ’ GREEN HEATING FUEL

When it comes to delivering greener , cleaner , renewable energy , CEMA members want their customers and Connecticut state lawmakers to know that the future is already here for their industry . Biomass-based fuel is in customers ’ tanks .

“ More than half of Connecticut residents use home heating fuel to keep their homes safe and warm during the cold , winter months ,” said Chris Herb , President of the Connecticut Energy Marketers Association ( CEMA ) which represents 600 locally owned home heating fuel companies in the state . “ If you use home heating fuel , we want you to know that you are making a difference right now by using ultra-low sulfur heating fuel mixed with renewable biodiesel .”

A new podcast , Mission Possible : Delivering Cleaner Fuel Today , features a CEMA member in each episode , telling their story and how they are making a difference for customers and

14 NOVEMBER 2024 | FUEL OIL NEWS | www . fueloilnews . com