Tank terminals are the backbone of the global chemicals, oil and gas supply chain. Without this vital component, modern means of travel, food production, chemicals and plastics manufacturing, and heating fuel distribution (amongst others) would not be possible. Tank terminals are, simply put, vital to sustain our standard of living.
Our client, a multinational tank terminal operator, has been acquiring several tank terminals for the past 2 years in the Netherlands, Germany and Spain with a combined storage capacity is almost 2.5 million cubic meters. Each of the terminals are located in port areas and service oil, chemicals and fuels. One of the terminals includes a chemicals production facility.
AN Valuations was asked to conduct a Purchase Price Allocation (PPA) relating to these transactions. Simply put, PPA is a revaluation of the target company’s balance sheet, recognition of new assets and liabilities and a calculation of residual goodwill. Purchase Price Allocation is required by accounting regulations when one business acquires another.
European tank terminal PPA’s in today’s environment are unique in that the main acquired intangible asset is permits. European directives on nitrogen emissions make it difficult to obtain permits for new tank storage terminals. For this reason, existing terminals are a premium investment.
Another unique aspect of tank terminal operators is long investment cycles. Major investment projects can require years to complete and can be for safety compliance, expansion, access points, market shift or cost optimization purposes. Safety compliance investments ultimately decrease the company’s cash flows, but make it possible for the company to continue operating. The other types of investment projects increase cash flows, but in some cases this does not occur until several years later.
AN Valuations has been conducting PPA’s and other types of valuations in the tank terminal industry for many years. Individual transaction sizes supported by AN Valuations have ranged up to EUR 1.1 billion. The combined valuation of tank terminal operator valuations supported by AN Valuations is more than EUR 2.7 billion.
About AN Valuations
Clients around the world trust AN Valuations for valuation advisory services. We help stakeholders in a broad range of industries with company valuations ranging from micro-cap to large-cap.
AN Valuations assists companies with valuations of businesses, financial instruments, derivatives, personal property and intellectual property (such as brand assets and patents) for transaction, fiscal, legal and accounting purposes, particularly in cross-border situations. Through our bespoke approach and global network, we customize teams to the needs of our clients.
For more information regarding purchase price allocations or other services provided by AN Valuations, do not hesitate to contact Andrew Pike at firstname.lastname@example.org or at +31 70 221 0058.