Transcript Taxand Client Presentation Template

The Choice is Yours
Alvarez & Marsal Taxand, LLC
LEADERSHIP  PROBLEM SOLVING  VALUE CREATION
Acquisitions & Dispositions, Tax Planning,
Choice of Entity
© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.
Contents
1
I. Introduction
II. Choice of Entity – Tax Considerations
III. Master Limited Partnership (MLP)
IV. Basic Structuring
V. Elections Under Section 338
VI. Common Due Diligence Tax Issues
VII. Recent Deals in the Marketplace
© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.
Layne J. Albert
2
Appendix I. Managing Director Biographies
 Layne J. Albert, a Managing Director with Alvarez & Marsal Taxand, LLC, advises clients on the federal income tax
ramifications of complex business transactions. He also advises clients on tax department design and operations,
including creating a tax department or managing a tax department through adversity, assistance with accounting for
income taxes and Sarbanes-Oxley compliance. Mr. Albert has significant experience with IRS and state tax
controversies, as well as state income and franchise tax issues.
 With more than 17 years of experience, Mr. Albert has significant experience in identifying, understanding and
managing federal and state tax issues related to complex business transactions, including mergers, acquisitions,
dispositions, financings, recapitalizations, reorganizations and bankruptcy. Mr. Albert has advised Boards of
Directors, and has worked closely with CEOs, CFOs, private equity investors, IRS staff and investment bankers.
He brings experience in the manufacturing, energy and service industries.
Layne J. Albert
Managing Director
 Prior to joining A&M, Mr. Albert was Vice President of Tax at Dynegy. Previously, he was Vice President of Tax at
Encompass Services. Mr. Albert also served as Tax Counsel for Tenneco. Additionally, he has served in the public
sector roles with Ernst & Young and Chamberlain, Hrdlicka, White, Williams & Martin.
 Mr. Albert earned a bachelor's degree in business administration, with a concentration in accounting, at the
University of Texas at Austin. He received a juris doctor from South Texas College of Law and a master of laws
degree (LL.M.) in taxation from the University of Houston. He is a Certified Public Accountant (CPA) in Texas.
Contact Details
700 Louisiana Street
Suite 900
Houston, TX 77002
Direct: (713) 221-3910
Mobile: (713) 302-6506
E-mail: [email protected]
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NOTE: Alvarez & Marsal employs CPAs but is not a licensed CPA firm.
Christopher Howe
A&M Professional Biographies
3
 Chris Howe is a Senior Director with Alvarez & Marsal Taxand , LLC in New York. Mr. Howe
has significant experience on transactional and general corporate tax matters in both the
bankruptcy and non-bankruptcy setting. He brings experience in private equity, corporate tax
and accounting, tax planning and tax controversy matters. His experience also includes
advising financial and strategic investors on tax aspects associated with mergers and
acquisitions and other transactional related matters including leveraged buyouts,
reorganizations, spin-offs, cross-border financing, and cash repatriation.
Christopher Howe
Senior Director
Transaction Tax
 Prior to joining Alvarez & Marsal, Mr. Howe was a Senior Manager with the Transaction
Advisory Services practice of Ernst & Young. He is also a alumni of Deloitte & Touché and
Arthur Andersen.
 Mr. Howe holds both a Master’s of Science in Taxation and a Bachelor’s of Science in
Business Administration from Northeastern University. He is a Certified Public Accountant
(CPA) in the state of Massachusetts, and is a member of the American Institute of Certified
Public Accountants (AICPA).
Contact Details
125 Park Avenue, 25th Floor
New York, NY 10017
Direct: (212) 763-9607
E-mail: [email protected]
© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.
NOTE: Alvarez & Marsal employs CPA’s but is not a licensed CPA Firm
Choice of Entity – Tax
Considerations
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Choice of Entity – Tax Considerations
Three most common legal entities that are encountered in US
private equity buyout transactions:
“C” corporation
 A traditional statutory (state law) corporation where no
election has been made to treat as an “S” corporation
“S” corporation
 A traditional statutory (state law) corporation that, subject to
certain requirements and restrictions, makes a special tax
election or “S” election
LLC/partnership
 A joint venture of two or more parties entered into for profit
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Choice of Entity – Tax Considerations
The “C” corporation tax considerations:
The C corporation is a separate taxpaying entity
Corporate income is usually subject to two levels of income
tax (i.e., “double taxation”)
 Entity level income tax
 Shareholder level tax (dividend distributions)
Losses and other tax attributes are retained at the corporate
level and do not flow through to shareholders
The treatment of these attributes to the corporation may be
subject to limitation upon a purchase or “change in ownership”
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Choice of Entity – Tax Considerations
The “S” corporation tax considerations:
Generally, not subject to entity level income tax
 Entity level income, gain or loss flows through to the
shareholders
 Shareholders report S corporation income, gain, or loss in
their personal income tax returns and adjust their tax basis
in their stock accordingly
No second level of income tax on distributions of previously
taxed earnings
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Choice of Entity – Tax Considerations
The “S” corporation tax considerations (continued):
Eligibility requirements
 Domestic corporation
 Maximum number of shareholders is 100
 Eligible shareholders are limited to US citizen or resident
individuals, certain estates, certain trusts and ESOPs
 One class of stock
Private Equity (PE) consideration
 PE funds and corporations are not eligible shareholders.
Thus, it is likely a corporation’s S election will terminate in
most transactions. As a result, a historic S corporation will
operate as a C corporation after a PE transaction
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Choice of Entity – Tax Considerations
The LLC or Partnership tax considerations:
Generally, not subject to entity level income tax
 Entity level income, gain or loss flows through to the
member/partner and is taxed on member/partner tax return
PE considerations
 Significant flexibility on the rights of equity interests and the
types of equity holders. However, LLCs may be complex
when compared to C corporations
 Management incentive benefits and complexities in the use
of profits interests vs. traditional corporate stock options
 Single-member LLCs are generally disregarded for US
federal income tax purposes
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Master Limited Partnership - (MLP)
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Master Limited Partnership (MLP)
11
What is MLP?
A publicly traded limited partnership
 Unique investment that combines tax benefits of limited
partnership with liquidity of common stock
Qualification for MLP status
Companies that receive 90% or more income from interest,
dividends, real estate rents, gain from sale or disposition of real
property, income and gain from commodities or commodity
futures, and income and gain from mineral or natural resource
activities
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Master Limited Partnership (MLP)
12
Nature of MLPs
 Rather than buying shares, investors buy units of partnership
commonly known as unit holders
 Tend to operate in stable, slow-growing parts of energy industry
 Typically grow by acquiring or constructing new pipelines and other
facilities
 General and Limited Partners
 General partner paid on a sliding scale, receiving greater share of
each dollar distributed as limited partner’s cash distribution rise. Its
take can reach as high as 50%, thus riskier
 General partner’s sliding scale gives extra incentive to increase
limited partner distribution, which has higher yield and is less risky
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Master Limited Partnership (MLP)
13
Benefits and Drawbacks
Tax avoidance
 Owners of partnership only taxed at individual level Entity
level income
Attractive yield
 Falls in 5%-7% range for limited and 3%-4% range for
general partnership
 Cash distributions exceed partnership’s taxable income
Tax complexity
 Larger unit holders may require investor to file tax returns in
various states in which the partnership operates
May owe taxes on partnership income if units are held in taxfree account like an IRA
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Master Limited Partnership (MLP)
14
Recent environment
Several general partners going public
New generation of E&P MLPs aiming to create cash flows by
investing in oil and gas fields companies going public
Tax laws that restricted MLP by mutual funds rolling back
MLPs paying significantly higher prices to acquire assets
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Basic Structuring
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Basic Structuring - Straight Stock Purchase Example
Seller
Cash
Buyer
100% of stock
of Target
Target
Capital
Acquisition
Newco
Target
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Debt
Lenders
Basic Structuring - Straight Stock Purchase Example
Target (T) is a C-Co
Seller = individual owners of T
100% of stock is purchased for cash
Tax consequences to Buyer
Newco takes cost basis in T stock
Book step-up in T net assets (purchase accounting)
No tax step-up in T assets
Tax consequences to Seller
No tax gain to T
Seller receives cash and reports a capital gain equal to the
difference between the proceeds and tax basis in the shares
(20% federal and state individual capital gain tax rate)
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Basic Structuring - Straight Stock Purchase Example
Other issues
T’s legal identity is preserved and business will operate as
subsidiary of acquiring company
Generally all liabilities of T (whether disclosed, undisclosed, or
contingent) will remain with T
Target’s tax attributes such as NOLs and tax credits will
remain with T subject to certain limitations (Sec. 382)
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Basic Structuring - Stock Acquisition General Consequences
 Carryover of target’s historical tax basis in assets
 Target is a “C” Corporation
 Typically the preferred exit for sellers (because of one level of tax at
capital gains rates)
 Target’s tax attributes (e.g., NOLs) carry over post-close, subject to
change-in-control limitations
 Target is an “S” Corporation
 May not result in significantly lower taxes to seller than asset sale (or
338(h)(10) transaction)
 Because an S Corporation is a flow-through entity, there are no tax
attributes to carryover.
i. Prior C corporation attributes (e.g., NOLs) carry over post-close,
subject to change-in-control limitations
 Target is a “C” Corporation Sub. Of Tax Consolidated Group
 Could be preferred exit for seller, if seller’s tax basis in target stock
exceeds target’s tax basis in its assets, or seller has expiring capital
losses
 Target’s tax attributes (e.g., NOLs) may carry over post-close
(depends on seller’s NOL position), subject to change-in-control
limitations
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Basic Structuring - Straight Asset Purchase
Buyer
Seller
Liquidation
$cash
Capital
Cash
Debt
Acquisition
Newco
Target
Net assets
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Lenders
Basic Structuring - Straight Asset Purchase
Target (T) is a C-Co
Seller = Target C-Co
100% of assets from T
Purchase price is all cash (can use other consideration such as debt)
Tax consequences to Buyer
Book step-up in Target net assets to fair market value
Tax step-up in Target net assets to fair market value
Tax consequences to Seller
T taxed on ordinary/capital gain income (40% federal and state
tax rate)
Seller receives cash in liquidation and has capital gain
(20% federal and state individual capital gain tax rate)
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Basic Structuring - Straight Asset Purchase
Value of basis step up
Step up
Tax
basis
Net assets
50
Step-up
200
Annual tax amortization (15yr)
13.33
Tax rate
40%
Annual tax benefit
5.33
NPV @ 10%
40.5
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Basic Structuring - Straight Asset Purchase
Other issues
May incur considerable expense with title transfers and state
transfer taxes. Contract should specify who bears these
costs.
If T is a C-Co, T’s shareholders will not be taxed on a straight
asset acquisition unless T distributes the sale proceeds.
T’s NOLs and other tax attributes do not carry over to
acquiring company. Attributes remain with T and can offset
gain on sale. If T is liquidated, unused attributes are lost.
Acquiring company may “cherry pick” which T liabilities will be
legally assumed. Undesired/ contingent liabilities can be left
with seller.
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Basic Structuring - Asset Acquisition
General Consequences
 Revalues target’s tax basis in assets to FMV
 Target is a “C” Corporation
 Generally undesirable for sellers; potential for double-tax on exit (at
corporate and shareholder levels)
 Sellers may not be adverse if target has significant NOLs to shield
corporate tax gains on asset sale
 Target is an “S” Corporation
 Possible if legal conditions allow; sellers generally pay only one level
of tax
 If target (or predecessor) was a C corporation within past 10 years,
some (or all) of the gains could be subject to built-in gains (“BIG”)
taxes
 Buyer might gross up seller for incremental taxes
 Target is a “C” Corporation Subsidiary Of Tax Consolidated Group
 Possible if legal conditions allow; depends on, among other things,
whether target has equal or higher tax basis in its assets than seller
has in its target stock
 Buyer might gross up seller for incremental taxes
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Elections under Section 338
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Elections Under Section 338 -Tax elections to treat a Stock
purchase as an Asset acquisition
Qualified stock purchase required
Unrelated corporate acquirer
Purchase of 80% or more of vote and value
Election made by the 15th day of 9th month beginning after
the month in which the acquisition occurs
For §338(h)(10) both the buyer and seller must sign; best to
include in the stock purchase agreement
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Elections Under Section 338 - Tax elections to treat a Stock
purchase as an Asset acquisition
T stock
ACQUIRER
Cash and/or other
consideration
Corporation
or
S corp S/H
Actual sale of T stock ignored
for tax purposes only
TARGET
(New Co)
Assets
Deemed taxable
sale of assets
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TARGET
(Old Co)
Deemed
liquidation
Elections Under Section 338 - Tax elections to treat a Stock
purchase as an Asset acquisition
 Elections under §338(h)(10) treated as a sale of assets by the
Target while it is an S corporation owned by its shareholders or
a C corporation owned by its corporate parent to a new
corporation (“New Target”) followed by a deemed liquidation of
the target.
 Gain on asset sale is included in the final S corporation return or
in the selling group’s consolidated return and gain on stock sale
is ignored.
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Elections Under Section 338 - Tax elections to treat a Stock
purchase as an Asset acquisition
 New Target assets get basis step-up equal to full fair market
value.
 Generally one level of seller tax but there can be exceptions in
certain cases.
 Note §338(h)(10) works in reverse in case of losses (FMV of
Target’s assets is less than tax basis then tax basis may be
stepped down).
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Elections Under Section 338 - Stock Acquisitions Treated As
Asset Acquisitions
Section 338(h)(10) (Election to Treat Stock Purchase as Taxable Asset
Purchase) - General Requirements:
 Corporate purchaser unrelated to seller(s)
 Seller must be:
 (a) an 80% corporate subsidiary of an affiliated group of companies or
 (b) an S corporation
 Qualified Stock Purchase (“QSP”): Purchase of 80% or more of voting power and
value of target’s stock (excludes certain preferred stock)
 Joint election by purchaser and seller must be filed by the 15th day of 9th month
following the month in which the acquisition occurs.
Section 338(h)(10) Consequences
 For Buyer
 Tax basis step-up in target’s assets
 Increase in after-tax cash flow
 For Seller
 May be additional taxes (federal + state) – “gross-ups”
 Complications in rolling shareholders
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Common Due Diligence Tax Issues
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Common Due Diligence Tax Issues – Federal
32
Historical Exposure
In a stock acquisition, any pre-closing tax exposures will
remain with the acquired entity. Moreover, where a
corporation is acquired from a consolidated group, it remains
severally liable under Treas. Reg. §1.1502-6 for the entire
group’s federal income tax during the period in which it was a
member of the group.
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Common Due Diligence Tax Issues – Federal
33
Audit Exams
Inquire as to whether or not entities have been audited by the
IRS and whether or not there have been any waivers or
extensions of any statutes of limitations with respect to federal
income taxes.
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Common Due Diligence Tax Issues – Federal
34
Hedging
If a transaction is timely identified as a hedge for tax
purposes, the character of income and deduction recognized
on each element of the hedge would be ordinary. If not, any
loss on the hedge may be characterized as a capital loss that
may not be used to offset ordinary income.
Generally, a hedging transaction must be identified for tax
purposes in a taxpayer's books and records on the date on
which the taxpayer enters into the transaction in order for any
loss on the transaction to be treated as ordinary. The
taxpayer’s identification must also identify the items or
aggregate risk being hedged within 35 days of entering the
hedging transaction.
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Common Due Diligence Tax Issues – Federal
35
Hedging
The absence of an identification that satisfies the
requirements can cause any loss on the transaction to be
treated as capital. For any transaction that is clearly a
hedging transaction, however, the regulations provide that
any gain is ordinary whether or not identification has been
made.
While Treasury Regulations may grant taxpayers relief for an
“inadvertent” failure to properly identify hedging transactions,
it is not clear whether such relief would be available. As a
result, any losses on the hedges could be treated as capital,
while any gains would be ordinary for U.S. federal income tax
purposes. Capital losses can only offset capital gains of a
U.S. corporation and can generally be carried back 3 years
and forward 5 years.
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Common Due Diligence Tax Issues - Federal
36
Net operating loss limitations – “Section 382”
After an ownership change, pre-change tax loss attributes are
subject to annual “Section 382 limitation”
Limitation:
 Generally = FMV of T stock x long-term tax exempt rate
 Downward adjustments to FMV of T stock may be required
i. Redemptions and corporate contractions (LBO
applicability)
ii.Certain capital contributions
iii.Certain non-business assets
iv.Certain controlled group members
 Unused limitation is cumulative
 Potential increase for certain built-in gains
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Common Due Diligence Tax Issues - Federal
37
Net operating loss limitations – “Section 382”
Built in Gains and Built in Losses
 Upon ownership change, T determines whether a net
unrealized built-in gain (NUBIG) or net unrealized built-in
loss (NUBIL) exists in its assets
i. NUBIG (NUBIL) = FMV of assets minus aggregate tax
basis
If NUBIG - Built-in gains (BIGs) recognized during next 60
months increase the limitation
If NUBIL - Built-in losses (BILs) including
depreciation/amortization recognized during next 60 months
are subject to limitation
Rules are complex and create inherent difficulty in
identifying/computing/tracking BIGs and BILs
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Common Due Diligence Tax Issues - Federal
38
Tax Contingency Reserves
Standards Codification (ASC) 740, Income Taxes, (ASC 740),
establishes the financial accounting and reporting standards
for capturing the income tax effects from an enterprise’s
current and historic activities.
FASB Interpretation No. 48 (“FIN 48”) is FASB’s formal
interpretation of ASC 740 and requires an enterprise to
evaluate its income tax positions based on tax laws and
regulations for financial reporting purposes.
In December 2008, FASB extended the deferral of the
application of FIN 48 for non-public enterprises until years
beginning after December 15, 2008 (that is, until 2009 for
calendar-year companies).
.
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Common Due Diligence Tax Issues - Federal
39
Tax Contingency Reserves
Upon adoption, corporations will recognize the effect of
income tax positions only if those positions are more likely
than not of being sustained. Recognized income tax positions
are measured at the largest amount that is greater than 50%
likely of being realized.
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Common Due Diligence Tax Issues - Federal
40
Transaction Expenses
Transaction expenses - $20 million in tax deductible items
that will be realized on the date of the closing related to:
Stock option deductions - $12 million
Restricted stock grants - $2 million
Deferred financing cost on existing debt - $1 million
Investment banking fees, advisor fees, etc. - $5 million
Seller advises that the tax benefit of these deductions should be
considered in the bid price.
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Common Due Diligence Tax Issues - Federal
Transaction Expenses
What is the value of these deductions? When can the
deductions be used?
Items to consider:
 These amounts will generally be considered expenses
incurred on the date of closing (pre-ownership change
period).
 The amounts will first be utilized against pre-close stub
period taxable income (seller’s period and seller’s benefit).
 Remaining amount may be carried back to the previous two
tax years for refunds, and/or
 Remaining amount could create an NOL carryforward or
add to an existing NOL carryforward which could be limited
going forward.
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Common Due Diligence Tax Issues - Federal
Transaction Expenses
As such, these amounts need to be considered in the cash
tax model to determine timing of actual benefit (and NPV). In
the example, these amounts are added to the existing NOL
but must first be reduced by 2005 pre-closing taxable income.
Total NOL available to carry forward to post-change year of
$40 million [subject to Section 382 limitation], as follows:
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Common Due Diligence Tax Issues - Federal
Limitations on deductibility of interest
Common limitations
 Applicable high yield discount obligation (“AHYDO”) rules
 Corporate acquisition indebtedness rules
 Disqualified interest rules - “earnings stripping”
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Common Due Diligence Tax Issues - Federal
Limitations on deductibility of interest
 AHYDO Rules
 Defers tax deductions for original issue discount (“OID”), including payment in
kind (“PIK”) interest, until interest is actually paid in cash if the yield-tomaturity (“YTM”) of the debenture exceeds the applicable federal rate (“AFR”)
+ 5%
 Permanently disallows OID deductions to the extent that the YTM exceeds
the AFR + 6%
 Application
 Borrower must be a C corporation. However, anti-abuse rules exist for noncorporate issuers
 Maturity date must be greater than five years from date of issuance
 YTM must be greater than or equal to the applicable federal rate (“AFR”) +
5%
 Debt must also have “significant OID”, which exists whenever, at the end of
any accrual period after the fifth anniversary of issuance, the total yield
accrued on the debt exceeds the total amount paid in cash by more than the
issue price x YTM (i.e., the first year’s yield)
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Common Due Diligence Tax Issues - Federal
Limitations on deductibility of interest
 Corporate acquisition indebtedness rules
 Disallows interest deduction for the lesser of:
 Total acquisition interest greater than $5 million in such year, or
 Interest for such year on tainted acquisition debt
i. Test is applied cumulatively to multiple acquisitions
Application
 Proceeds are used to acquire at least 2/3rds of a target company
 Debt is issued with equity kicker or conversion feature
 The debt is subordinated to trade creditors or unsecured debt
 D:E ratio is greater than 2:1 or interest is in excess of 1/3 of earnings
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Common Due Diligence Tax Issues - Federal
Limitations on deductibility of interest
Limitation applies to excess interest expense on debt due to a
related person if no tax is imposed with respect to such
interest income.
 In the case of interest paid or accrued to a partnership (or
LLC) the determination is made at the partner level.
 Foreign owners, tax exempt owners, pension funds, etc.
Excess interest is interest expense in excess of adjusted
taxable income. EBITDA is generally used as a proxy for
adjusted taxable income.
 Excess interest in a given year can be carried forward.
The rule does not apply if D:E does not exceed 1.5:1
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Common Due Diligence Tax Issues – State and Local
47
Income, Franchise Taxes – Nexus Issues Related to Inventory
 Inventory held in a state, even if held by a third party, may
result in a nexus with the state and create a filing obligation.
Energy companies that are transporting their product across
state lines and storing it, even temporarily, in a state while in
transit which may create an income/franchise, sales, and
property tax filing obligation.
 Pipelines
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Common Due Diligence Tax Issues – State and Local
48
Sales Tax - Exemption for Resale
Energy Companies that produce their energy to sell to energy
providers may be entitled to an exemption from sales tax as
sales for resale.
 Energy companies should ensure they are diligently
collecting exemption certificates from all customers.
Specific exemptions per state
Certain states do not impose sales tax on the sale of energy,
such as Massachusetts.
 It is important to review the specific state law regarding the
taxability of energy.
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Common Due Diligence Tax Issues – State and Local
49
Use Tax – Manufacturing Equipment Exemptions
Many states have an exemption from sales/use tax for
manufacturing equipment and replacement parts.
 In some instances, the bulk of the equipment purchased by
an energy company that produces energy may be exempt
from sales/use tax.
 This exemption is particularly useful for energy companies
that produce energy.
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Common Due Diligence Tax Issues – State and Local
50
Property Tax – Abatement Agreement Opportunities
Many municipalities are entitled to enter into agreements to
abate certain taxes, such as property, for a company in
exchange for established payment schedules, promises to
remain for a set period of time, and/or promises to hire and
maintain employment of a certain number of municipal
residents.
 Energy companies may be able to leverage their production
of energy to the area and stable, high-tech job market to the
municipalities.
Payroll Tax – Fringe Benefits
As a general rule for all industries, auto allowances, in excess
of the amount used solely for work, must be included on an
employee’s W-2.
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Common Due Diligence Tax Issues – International
International Considerations
 Regional allocation of EBITDA and other cash flow items is necessary
to quantify taxes.
 Capital structure will have a significant impact on taxes
 In the case of interest paid or accrued to a partnership (or LLC) the
determination is made at the partner level.
 In a US Holdco structure, US limitations on foreign tax credit
utilization can result in double taxation.
 Placement of debt in the regions generating significant cash flows will
often reduce tax inefficiencies.
i. External debt
ii. Internal debt pushdowns
 Beware of trapped losses that do not provide a current tax benefit.
 Interest expense
 Deductible expenses resulting from change of control
(e.g., options and debt “make whole” fees)
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Common Due Diligence Tax Issues - Compensation & Benefits
52
Section 280G
 Section 280G generally provides that if certain payments in the nature
of compensation paid to a “disqualified individual” equal or exceed three
times the individual’s “base amount”(“parachute payments”), then all
amounts paid in excess of one times the base amount are
nondeductible to the employer (the “excess parachute payment”).
 The base amount is the average of the individual’s W-2 Box 1
compensation for the five years preceding the year in which the
change in control occurs.
 20% excise tax on the recipient of any “excess parachute payment,”
which is in addition to normal withholding tax and income tax and is also
non-deductible.
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Recent Deals in the Marketplace
© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.
Recent Deals in the Marketplace
54
 1/2008: Continental Energy Corporation purchase of natural gas operations of
PNM Resources ($620 million in cash)
 4/2008: Hoosier Energy REC, Inc. purchase of Holland Energy LLC ($383
million)
 1/2009: Natural Gas Partners Midstream & Resources LP purchase of 40%
interests in MarkWest Liberty Midstream ($200 million in cash)
 2/2009: Denbury Resources Inc. purchase of Hastings Complex (oil field) from
Venoco Inc. ($201 million)
 2/2009: Valero Renewable Fuels Company LLC purchase of 5 production
facilities and a development site of Valero Energy Corporation ($477 million-$280 million in cash)
 2/2009: GE Capital and Alinda Capital purchase of Regency Intrastate Gas
($653 million)
 3/2009: NRG Energy Inc. purchase of Reliant Energy Retail Services LLC ($288
million)
 3/2009: First Solar Inc. purchase of solar project development business from
OptiSolar Inc. ($400 million in equity)
 3/2009: Agstar Financial Services ACA purchase of VeraSun Energy
Corporation ($319 million)
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Recent Deals in the Marketplace
55
 4/2009: Spectra Energy Partners purchase of NOARK Pipeline System LP from
Atlas ($300 million in cash)
 4/2009: Atlas America Inc. purchase of Atlas Energy Resources LLC ($1,419
million)
 5/2009: Talon Oil & Gas LLC purchase of 60% stake in Barnett Shale natural
gas assets of Denbury Resources Inc. ($270 million)
 5/2009: TC PipeLines purchase of North Baja Pipeline ($391 million)
 6/2009: Cameron International purchase of NATCO Group ($728 million)
 6/2009: HLND MergerCo LLC purchase of Hiland Partners LP ($304 million)
 6/2009: Indigo Minerals LLC purchase of Chesapeake Energy ($218 million)
 6/2009: Magellan Midstream Partners L.P. purchase of Longhorn Partners
Pipeline L.P. ($350 million)
 6/2009: Enterprise Products LP purchase of TEPPCO Partners LP ($6 billion –
but may be too downstream)
 6/2009: Encore Operating L.P. purchase of EXCO Resources Inc. ($375 million)
 6/2009: TCW Energy & Infrastructure Group purchase of Pinon Gathering
Company LLC ($200 million in cash)
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Recent Deals in the Marketplace
56
 6/2009: Abraxas Petroleum Corporation purchase of Abraxas Energy Partners
LP ($202 million)
 7/2009: Targa Resources Partners LP purchase of Downstream Business of
Targa Resources Inc. ($530 million)
 8/2009: Pride International purchase of Seahawk Drilling ($296 million)
 8/2009: LS Power Group purchase of five peaking and three combined-cycle
generation assets from Dynegy Inc. ($1,498 million)
 8/2009: Williams Companies Inc. purchase of Piceance Valley of Western
Colorado ($258 million)
 8/2009: Kinder Morgan Energy Partners L.P. purchase of natural gas treating
business of Crosstex Energy L.P. ($266 million)
 9/2009: Quanta Services purchase of Price Gregory Services ($350 million in
cash and equity)
 9/2009: Apollo Management LP purchase of Parallel Petroleum Corporation
($483million)
 9/2009: Global Infrastructure purchase of 50% stake in Chesapeake Midstream
($588 million)
 9/2009: Sheridan Holding Company I LLC purchase of natural gas producing
assets from EXCO Resources Inc. ($540 million)
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Recent Deals in the Marketplace
57
 10/2009: MEMC Electronic Materials Inc. purchase of SunEdison LLC ($289
million)
 11/2009: Denbury Resources purchase of Encore Acquisition Co. ($4 billion –
but not sure how much gas v. oil)
 12/2009: Mariner Energy Inc. purchase of substantially all assets of Edge
Petroleum Corporation ($215 million)
 1/2010: Newfield Exploration Company purchase of 350,000 gross acres from
TXCO Resources Inc. ($217 million)
 2/2010: Western Gas Partners LP purchase of midstream assets from Anadarko
($254 million)
© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.