Growing Member Benefits— One Acquisition at a Time

October 17, 2016

Written By Adam Buckallew

MFA Oil Company actively seeks out opportunities to expand its business to better serve customers and offer greater benefits to owners. The department behind this objective, Mergers and Acquisitions, takes a strategic look at potential acquisitions and helps usher new companies into the MFA Oil family.

“We look for acquisition targets that will fit well and make our current operations more efficient and profitable,” says Don Smith, director of mergers and acquisitions. “We want to invest our money in ways that create the greatest return for our farmer-owners.”

Profits increase as MFA Oil expands its territory and improves current operations. As earnings grow, farmer-owners see a greater return in patronage. Additionally, farmers who didn’t reside in MFA Oil territory before now have the option of becoming members.

“When we expand our territory, it opens up membership opportunities for farmers who weren’t eligible before,” says Jon Ihler, vice president of sales and marketing. “There is value in being part of MFA Oil.”

Beyond the physical components of the acquisition, MFA Oil also gains strength in a not-so-tangible way.

“Acquisitions allow us to see how other companies operate, and we get to learn from that,” Ihler says. “It gives us knowledge about the business, which makes us stronger.”

This knowledge usually rests in a business’s most important asset—its employees.

“Acquisitions bring talent into our company. There are very talented individuals who run and work at these businesses,” Ihler says. “These people have a deep understanding of the industry, and it benefits the entire company when we add them to our talent pool.”

Located remotely across the MFA Oil trade area, a dedicated team of acquisition specialists focus on integrating companies and verifying assets. This paves the way for a smooth transition for prior owners and new customers.

The acquisition process begins with identifying a potential seller that has a general strategic fit with MFA Oil. From there, the team requests information, and if the business is interested, begins negotiating. If a deal is reached, they work with the seller even after the transaction finishes. MFA Oil often engages the former owners in a transitional role to help ensure the integration happens smoothly.

“We try to make the changes less stark for the employees of the company being sold,” Smith says. “Initially, we’re going to run things the way the operation ran before and mimic the corporate culture.”

The most challenging aspect of the job isn’t always the negotiating or analyzing—it’s managing the emotional attachment sellers have to their businesses.

“We want to assure sellers that we’re going to take good care of their companies—their babies—properly,” Smith says. “It’s tough sometimes. It’s about letting go of a business someone has been emotionally and financially tied to, sometimes for generations.”

“Don has the ability to relate and make people comfortable,” Ihler says. “He explains our company history and values to sellers well.”

The recent acquisitions of S&S Oil and Propane and Lybarger Oil have substantially increased MFA Oil’s footprint in Kansas. Ihler said these acquisitions played a major role in the company’s expansion.

“These acquisitions allowed us to step into Kansas where we had limited sales before,” Ihler said. “Both were instrumental in expanding the size and strength of our market in this area.”

Since the beginning of its 2012 fiscal year, MFA Oil has acquired 19 companies, including expansion into Utah and Tennessee and an increased presence in Kansas and Missouri.

With farmer-owners and customers at the forefront, the Mergers and Acquisitions department continues searching for opportunities to grow MFA Oil and increase the benefits of membership.