FIRST SEEN IN BPN MAGAZINE | Imagine you recently had dinner with two friends who worked at different companies. You were each discussing your jobs, the projects you were working on and your bosses. One friend shared they had just joined a new team, and it was the first time in ages they felt motivated. They said it was so nice working for a leader where they felt they were supported, and it was clear what was expected of them. Your other friend was quiet and when pressed about how things were at work, reluctantly admitted things were not going well. The leader of the team would get angry and fly off the handle for the slightest reason, wouldn’t listen or take feedback and didn’t seem to care at all about the team, just getting results. Your friend admitted if the situation did not improve, they may be looking for another job. The two leaders described by your friends are in essence describing their leader’s level of emotional intelligence.

What really is emotional intelligence and why should it be important to you and your business? Emotional intelligence or Emotional Quotient (EQ) according to Daniel Goleman, an American psychologist and author who made the phrase recognizable in the early 1990’s, is the ability to identify, assess, and control one’s own emotions, the emotions of others, and that of groups or said another way, the ability to understand and manage your emotions as well as recognize and influence the emotions of those around you.

According to Daniel Goleman, emotional intelligence is a set of personal skills that are learned and learnable.  These skills are a combination of self-awareness, managing your emotions well, empathy—tuning into other people and putting it all together to have effective relationships. Emotional intelligence is broken into four domains: self-awareness, self-management, social awareness, and relationship management.

• Self-Awareness: This is the ability to understand your affect on others. It’s knowing what you are feeling and understanding how it shapes your perceptions, thoughts and impulses to act.
• Self-Management: This relates to the ability to control your impulses and avoid acting rashly. When you get upset or angry you can manage your emotions to keep them from disrupting what you are currently doing.
• Social Awareness: Empathy is the key here—trying to understand another’s point of view, not just listening to them. You understand what another person thinks and feels, and you care about them.
• Relationship Management: This is defined by the ability to manage relationships and productively express your emotions—how you perceive emotions and interact and communicate with others. Can you handle conflicts well, keep yourself calm, listen to the other person? Are you being an effective communicator?

Propane businesses, in their most simplistic definition, deliver propane and provide services to customers for a fee and hopefully for a profit. In most delivered fuels businesses, a great deal of time and money is spent on managing gross margins, increasing operational efficiencies, improving strategies and marketing, etc. to increase profitability. Other than price, what makes a potential customer want to do business with your company? What differentiates your company from every other company delivering fuel and providing service in your area? Do you ever consider it’s the relationships you and your staff have built within your communities, the way your staff handles difficult situations or conflict, the way your staff can connect with your customers and potential customers? It’s the interpersonal skills and leadership of your staff that your customers notice. Bottom line, people do business with people, and they want to do business with people they like.

It seems that people have less patience and tend to become confrontational more easily. Consider all the encounters your drivers, service technicians, salespeople, customer service personnel, managers and you personally have with your customers and potential customers. Imagine if one of your employees was in a difficult situation with a customer and they had the interpersonal skills to better understand and manage their emotions while recognizing and influencing the emotions of the customer. This is the significance of how emotional intelligence can influence your business.

More commonly discussed are the impacts of emotional intelligence within organizations. Emotional intelligence is an interpersonal skill that distinguishes effective leaders. It is also a skill that, when absent often results in workplace conflicts and misunderstandings which arise from the person’s inability to recognize, comprehend and manage emotions. The old saying, “one bad apple spoils the barrel” recognizes that individuals and especially leaders who have low emotional intelligence will benefit from help to develop the skills (or provide them the opportunity to work elsewhere) could significantly improve your business. Employees tend to leave bad leadership, not companies just like employees tend to follow good leadership. When talking to business owners, one of their key challenges is finding good employees. We all understand the importance of hiring individuals with the technical skills needed for a position, but it’s their emotional intelligence that will help them be great employees and eventually move up within the company.

Where to start? The first step is becoming knowledgeable about emotional intelligence and sharing it with your staff. It should be treated like any other training performed in your business. One of the most stressful situations for your employees is dealing with difficult customers or difficult fellow employees. Most would welcome the opportunity to learn skills to better handle difficult situations. And it should start at the top.

The most exciting thing about this sought-after interpersonal skill, emotional intelligence, is it can be learned or is learnable at any age and any level. Anyone can continue to develop this skill at any point in their life if they are motivated. This is great news for you and your business!

First published in BPN Magazine, January 2025 issue.

About Cetane Associates

Cetane is a leading provider of financial advisory services to business owners in the propane, heating oil, pest control, lawn care, landscaping, and HVAC & plumbing industries. Clients engage Cetane to advise on sales, spin-offs, and acquisitions, as well as to perform valuation and ad hoc corporate finance assignments. For more information, please visit www.cetane.com.

FIRST SEEN IN LP GAS MAGAZINE | Selling a business is a monumental milestone that few people get the privilege of doing. Many sellers approach the process with excitement and optimism yet fail to recognize the many pitfalls that can derail even the most promising of negotiations. Understanding what can kill a deal is crucial for anyone navigating this landscape effectively.

This article will delve into seven key pitfalls that can ultimately lead to a deal falling through. By being aware of these challenges and taking proactive steps to address them, sellers can significantly enhance their chances of achieving a successful business transaction.

• Lack of preparation. Sellers who fail to organize their financial records, to resolve outstanding legal, tax or environmental issues, or to streamline operations risk creating red flags for potential buyers during due diligence. A well-prepared business instills confidence in buyers and can significantly accelerate the transaction process, as well as increase the value of the business.
• Overvaluation. Setting an unrealistic asking price can immediately turn away buyers. Overvaluation often stems from emotional ties or a misunderstanding of market conditions. Sellers should rely on professional valuation experts to set a fair price that reflects both the company’s current performance and market realities.
• Emotional attachment. For many owners, their business is deeply personal, which can lead to emotional decision-making during negotiations. This attachment can result in stubbornness on terms or an unwillingness to compromise. Recognizing and managing this emotional component is critical to maintaining a clear-headed approach throughout the process.
• Inadequate advice. Sellers who forgo experienced advisers often struggle to close deals due to the complexities and time involved. Legal and financial advisers provide critical support by conducting due diligence, negotiating terms, ensuring compliance and optimizing the deal for tax benefits. Engaging professionals early helps streamline the process and safeguards the seller’s interests.
• Failure to qualify buyers. Not all buyers are created equal, and failing to vet them properly can lead to wasted time and resources. The current market is increasingly attracting inexperienced buyers who are eager to break into the acquisition space but often lack the financial capacity or operational knowledge needed to follow through on a deal. Sellers should establish clear criteria for buyer qualifications and thoroughly evaluate potential buyers to ensure they are serious, capable and a good fit for the transaction.
• Timing. Timing can make or break a deal, as market conditions, economic trends and industry dynamics all play a role in determining buyer interest. Selling during a downturn or when the business is underperforming can significantly reduce its value. Sellers should aim to time the sale strategically, ideally during periods of growth and favorable market conditions.
• Shared vision and values. Cultural misalignment between the buyer and seller can sow distrust and uncertainty, especially if the buyer plans to retain the existing team. Ensuring alignment on core values and future goals is vital to building trust and confidence in the transition. Open discussions about the company’s mission and vision can help bridge any gaps and solidify the deal.

Selling a small- to medium-sized business is not just a financial transaction – it’s a complex process that requires careful planning, realistic expectations and a clear understanding of potential obstacles. By addressing these pitfalls, sellers can position themselves for a smoother and more successful deal.

Even if you don’t plan to sell your business in the immediate future, the time to start preparing is now. The stakes are high, but with proper guidance and a proactive mindset, sellers can avoid deal killers and create a foundation for a transaction that benefits all parties involved. Preparation and perspective truly are everything. 

First published in LP Gas Magazine, April 2025 issue.

About Cetane Associates

Cetane is a leading provider of financial advisory services to business owners in the propane, heating oil, pest control, lawn care, landscaping, and HVAC & plumbing industries. Clients engage Cetane to advise on sales, spin-offs, and acquisitions, as well as to perform valuation and ad hoc corporate finance assignments. For more information, please visit www.cetane.com.

FIRST SEEN IN BPN MAGAZINE | As we look to kick off 2025, it’s worth reflecting on the transformative changes of 2024. A new administration was elected alongside a Republican-led Senate and House of Representatives, ushering in a dynamic political landscape. The propane industry celebrated significant legislative victories at both the federal and state levels, reinforcing its role in the nation’s energy mix. And we saw Taylor Swift’s Eras Tour become the highest-grossing concert tour of all time.

While 2024 saw robust activity in the propane M&A market, several challenges created overall headwinds. The continued phase-out of enhanced bonus depreciation limited certain tax advantages for businesses, while elevated interest rates continued to affect deal financing. Additionally, warmer-than-average winters in 2022 and 2023 reduced delivered volumes and impacted cash flows for many propane operators. Despite these hurdles, however, the propane industry remains resilient.

As the M&A market kicks off in 2025, many industry players are optimistic about new opportunities to consolidate, innovate and grow. A significant factor shaping this market is the age demographic of fuel business owners, particularly in the propane sector.

A considerable number of propane business owners are approaching retirement age, many without a clear succession plan. This trend mirrors broader demographic shifts across industries, as the baby boomer generation reaches “peak 65” — the point in history when the largest number of Americans turn 65.

As many propane company owners approach retirement over the next five years, we expect an increase in the amount of companies that will go on the market. This gets investors who are focused on consolidating industries very excited. The coming years are poised to bring substantial activity as investors position themselves to capitalize on this generational shift.

As we look ahead to what the 2025 M&A market will bring for the propane industry, it’s important that we consider three key areas. These include the broader impact of the overall economy on M&A activities, private equity’s impact and the implications of the evolving political environment.

1. Economy

The U.S. economy is positioned for robust growth in 2025, with GDP projected to increase by 2.5%. According to Goldman Sachs’ chief economist, Jan Hatzius, inflation has continued to decline, nearing central bank targets. “Most central banks are well into the process of cutting interest rates back to more normal levels,” Hatzius notes, signaling a favorable economic climate.

This improved environment is anticipated to drive a surge in mergers and acquisitions activity. EY (Ernst & Young) forecasts a 20% increase in deal volume for 2025, accompanied by a 9% to 10% rise in private equity transactions. These trends suggest private equity will play a pivotal role in shaping the evolving M&A landscape.

For the propane industry, these developments are particularly encouraging. With economic optimism growing and private equity firms continuing to enter as new buyers in fragmented sectors like propane for consolidation opportunities, the stage is set for significant deal activity. Combined with a strong economic foundation, 2025 is shaping up to be a banner year for M&A in the propane sector.

2. Private Equity

Private equity (PE) firms are sitting on record levels of “dry powder” — capital reserved for investment — that they need to deploy. Even more pressing, many PE firms have held onto assets longer than anticipated and must begin selling to deliver returns to their investors. Delaying these sales risks pushing them into a forced-sale environment with less favorable terms.

FIRST SEEN IN FUEL OIL NEWS | In the propane and heating oil industry, staying connected with employees and customers is crucial. For many owners, the last time they spent a full day in a truck might be a distant memory, overshadowed by the demands of strategic planning and management. Spending time on a truck making deliveries provided valuable insights and learning opportunities that bridged the gap between strategy and operations. My experience before riding on a truck was largely limited to analyzing financial statements and having discussions with owners and colleagues. However, firsthand exposure to the delivery operations has provided me with deeper, practical insights that have significantly impacted my understanding of the business.

A Common Practice for Some, A Forgotten Experience for Others

While some owners still routinely make deliveries, for others it has been several months or even years since their last time on a truck. This detachment from the day-to-day realities of delivery operations can lead to a disconnect between what is envisioned in the meetings and what happens on the ground. Re-engaging with this aspect of the business can help to understand driver perspectives, ensuring that strategies are grounded in the realities faced by delivery drivers.

Bridging Strategy and Operations

Understanding the challenges and successes drivers encounter every day is critical. A ride-along offers a firsthand look at the operational side of the business. This experience provides a deeper understanding of logistical challenges, customer interactions, and the overall efficiency of delivery processes. By experiencing these firsthand, owners can better align their strategic decisions with operational needs, leading to more practical and effective business strategies.

Uncovering Insights and Reducing Friction

Spending time on a delivery truck allows for informal conversations with drivers. These employees often have a wealth of ideas that can make their day-to-day tasks easier and more efficient. From route optimization to customer service improvements, drivers’ insights can lead to significant enhancements in operations. Engaging in these conversations can uncover creative solutions that might otherwise remain unheard.

Understanding the daily obstacles drivers face helps owners identify areas where friction can be reduced. Whether it’s streamlining paperwork, improving route planning, or enhancing vehicle maintenance protocols, firsthand experience can highlight inefficiencies that need addressing. Making these improvements not only makes the drivers’ jobs easier but also increases overall operational efficiency, leading to better service and cost savings.

Hearing driver feedback offers owners and managers an opportunity to explain how some of the tasks drivers may find repetitive or burdensome help provide the necessary information for making better decisions in the office. This mutual understanding can foster a more cooperative and productive working environment, helping drivers see how their roles play a crucial part in the symphony of the business.

Identifying and Mentoring Potential Leaders

Riding along with an employee who you anticipate could take on a larger role within the company provides an excellent mentoring opportunity. Spending a day in the field allows for in-depth conversations that may not typically happen during a busy office day. This interaction helps in assessing the employee’s understanding of the business, their problem-solving skills, and their potential for leadership roles.

Gaining a 360-Degree View

Getting on a truck gives owners a 360-degree understanding of their business. This holistic view ensures that decisions made at the strategic level are informed by operational realities. At the same time, it offers drivers a chance to increase their understanding of the business, potentially identifying those who have qualities that could make them successful managers. This enhanced perspective enhances the owner’s ability to lead effectively, making them more attuned to both the challenges and the opportunities within the business.

Stepping away from the desk and into a delivery truck is not just a nostalgic trip down memory lane. It is a strategic move that can significantly benefit both the owner and the business. By understanding the daily operations, engaging with employees, and identifying ways to improve efficiency, owners can lead more effectively and ensure their strategies are both practical and impactful. So, next time you find yourself disconnected from the daily grind, remember the value of getting on a truck. It might just be the key to unlocking new opportunities for your business.

Duncan McMurchie

Associate, Cetane Associates

January 2025

First published in Fuel Oil News, September 2024 issue.

About Cetane Associates

Cetane is a leading provider of financial advisory services to business owners in the propane, heating oil, pest control, lawn care, landscaping, and HVAC & plumbing industries. Clients engage Cetane to advise on sales, spin-offs, and acquisitions, as well as to perform valuation and ad hoc corporate finance assignments. For more information, please visit www.cetane.com.

FIRST SEEN IN BPN MAGAZINE | On April 23, 2024, the Federal Trade Commission (“FTC”) announced a new rule (“Final Rule”) that, once in effect, would effectively prohibit employers from entering into new non-compete agreements with workers and invalidate most existing non-compete agreements nationwide. The Final Rule was scheduled to go into effect 120 days after being published in the Federal Register, or September 4, 2024 (the “Effective Date”). However, on August 20, 2024, a Texas federal district court ruled that the FTC exceeded its authority in issuing the Final Rule and effectively blocked its enforcement nationwide (the “Texas court suspension”). The FTC has sixty (60) days, or until October 19, 2024, to appeal the decision. While the FTC may not win this battle on non-competes, the Final Rule has brought up the issue of non-competes on a national level, and many state legislatures have either passed or are introducing legislation banning non-compete agreements in their states. Unless the U.S. Court of Appeals for the Fifth Circuit reverses the decision of the district court, the Final Rule will remain unenforceable during the appeal process. There are other cases to be decided in other district courts regarding the Final Rule, and a split in the circuits’ decisions could lead the Supreme Court to weigh in on the Final Rule. However, based on recent rulings by both the U.S. Appeals Court for the Fifth Circuit and the Supreme Court, the FTC’s success on appeal seems doubtful.

This article will provide an overview of the Final Rule, the reasoning behind the Final Rule, its implications for employees and employers, and what employers can do to minimize its impact should the Final Rule be upheld.

In announcing the Final Rule, the FTC chair, Lina M. Khan, stated, “Noncompete clauses keep wages low, suppress new ideas, and rob the American economy of dynamism, including from the more than 8,500 new startups that would be created a year once noncompetes are banned. The FTC’s Final Rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.” Once the Final Rule goes into effect, it will supersede state laws on noncompetes if a state law permits or authorizes conduct that conflicts with the Final Rule. If an employer tries to enforce a noncompete after the Effective Date, it will be considered an “unfair method of competition” and a violation of Section 5 of the FTC Act, which may result in penalties or injunctive relief. In cases of non-compliance, the FTC cannot fine a company directly. Still, it can issue an enforcement action to order compliance, requiring the employer to provide notice to employees in an individual manner that their noncompete cannot be enforced. If the order is not acted on, the FTC can file an action in court seeking an order to enforce the compliance order. Failure to follow the compliance order could result in fines of up to $51,744 for each violation.

For the delivered fuels industry, the Final Rule will impact almost all workers, which, under the Final Rule, includes employees and independent contractors. After the Effective Date, existing non-competes will no longer be enforceable and new non-competes will not be allowed to be entered into with employees. The Final Rule makes it easier for employees to leave their current employer and work for a competitor or start a new business without the fear of legal action being taken against them for violating a non-compete agreement. Indeed, providing workers with the freedom to change jobs, which could lead to more innovation and to more new companies being formed, was part of the rationale for the Final Rule. The FTC believes that wages for employees will increase as employers will need to offer competitive compensation to hire and retain employees. It is important to note that a breach or violation of an existing non-compete agreement that was in place prior to the Effective Date may be enforced if the action related to the non-compete violation occurred prior to the Effective Date.

However, the Final Rule does not prohibit non-compete agreements in all situations. Exceptions exist for senior executives and business owners. Under the Final Rule, a senior executive is defined as an employee earning over $151,164 in the prior year and in a policy-making position in the business. While non-compete agreements with senior executives are permitted and are enforceable by an employer after the Effective Date, employers may not enter or attempt to enter into such agreements after the Effective Date. The Final Rule also does not apply to owners who enter into a non-compete agreement in relation to a bona-fide sale of their business, regardless of their ownership percentage, and such non-compete agreements are enforceable after the Effective Date.

A key aspect of the Final Rule may have an immediate impact on businesses. Prior to the Effective Date, which was to be September 4, 2024, employers are required to inform employees in writing, except for senior executives, that their non-competes are no longer enforceable. This notice must be clearly communicated if the employer has either a mailing address, email address, or cell phone number of the affected employee. The Final Rule provides model language for such notice. In the meantime, though, due to the Texas court suspension, employers are not required to discontinue non-competes or issue notices to employees with non-compete agreements as previously mandated by the Final Rule.

Updating Agreements

Although the Final Rule provides more freedom for employees, there are certain steps that employers can take to protect their business. One way to mitigate the impact is through restrictive covenants with employees and independent contractors. Non-disclosure agreements are used to protect trade secrets, and non-solicitation agreements for customers and employees are used to prevent former employees from poaching customers and employees of the employer. Employers should carefully review, with the assistance of legal counsel, the current restrictive covenant agreements they have with their employees. Such reviews should be done so that any changes made to the agreements are enforceable and do not violate the requirements of the Final Rule. Although the Final Rule does not prohibit the use of the restrictive covenant agreements mentioned above, it does establish that such agreements need to be narrowly tailored so that they do not have the same effect as a non-compete agreement.

For non-disclosure agreements, the Final Rule provides that non-disclosure agreements can function as non-compete agreements when they “span such a large scope of information that they function to prevent workers from seeking or accepting other work or starting a business after they leave their job.” The FTC states that such agreements “prevent a worker from working for another employer in the same field and are therefore non-competes under the Final Rule.”

The FTC has used the same line of reasoning for non-solicitation agreements for customers and employees. A non-solicitation agreement of customers will be considered to function as a non-compete if it imposes undue restrictions on an employee’s ability to find future employment. For instance, if the employee’s non-solicitation agreement for customers extended to all the company’s customers and not only the customers whom the employee had relationships with, this agreement would violate the Final Rule as it does not allow the employee to work in the same industry, thus acting as a non-compete.

Using Diverse Retention Tools

Other practices can help companies mitigate the effects of the Final Rule. Besides updating existing non-disclosure and non-solicitation agreements, companies can use different tools to help hire and retain employees. Employees will be more inclined to stay with their current employer if retention tools such as bonuses, deferred compensation plans that require continued employment to receive payouts, and equity rewards that vest over lengthy periods are in place. Companies may consider which senior executives do not have non-competes and enter into a non-compete agreement before the Effective Date. Companies may also invest in internal training and development so that the required skills needed to replace a departed employee are acquired by current in-house employees, and outside employees from competitors who may bring in non-compete issues do not need to be hired. Another suggestion is to invest in and maintain customer relationships so that the relationship is independent of individual employees.

In conclusion, the FTC’s Final Rule introduces a major change by banning most non-compete agreements nationwide. While this increases employee freedom, it presents a challenge to employers who rely on non-competes to help protect their business interests. Although a Texas court currently blocks the Final Rule’s implementation, employers should still prepare by reassessing their restrictive covenants with legal counsel and adopting alternative strategies, including increased use of restrictive covenants and retention tools and investing in training and customer relationships to adapt to the new regulatory landscape. Employers or their legal counsel should carefully follow the Final Rule as it moves through the appeals process, which could take up to eighteen months. Companies, in the meantime, should identify which employees and former employees have active non-compete agreements in place and be prepared to notify them, if the Final Rule is upheld, that their non-compete agreements are no longer enforceable by the company. With proper planning, businesses can navigate these changes and remain competitive.

Fred Lord

Director, Cetane Associates

January 2025

Sources

FTC Announces Rule Banning Noncompetes | Federal Trade Commission

Noncompete Rule | Federal Trade Commission (ftc.gov)

FTC Non-Compete Ban: What You Need to Know (UPDATED) | Seyfarth Shaw LLP – JDSupra

Life After the FTC Non-Compete Ban: What Companies Should Know (orrick.com)

Don’t Fret (Yet): Trade Secrets, NDAs and Non-Solicits After the FTC Non-Compete Rule | Insights | Holland & Knight (hklaw.com)

FTC’s Final Rule Banning Non-Competes: What Is It and How “Final” Is It? | Locke Lord LLP – JDSupra

Two Exceptions to FTC’s Non-Compete Ban | ThinkAdvisor

Gibson Dunn: FTC Issues Final Rule Barring Employee Non-Compete Agreements

What Employers Need to Know About the FTC’s Ban of Non-Competition Agreements | Lippes Mathias LLP – JDSupra

Battle Over/War Isn’t: Employer Considerations Now That FTC Non-Compete Ban Is Set Aside – Jackson Lewis

This article was first published in Oil & Energy , October 2024 Issue.

About Cetane Associates

Cetane is a leading provider of financial advisory services to business owners in the propane, heating oil, pest control, lawn care, landscaping, and HVAC & plumbing industries. Clients engage Cetane to advise on sales, spin-offs, and acquisitions, as well as to perform valuation and ad hoc corporate finance assignments. For more information, please visit www.cetane.com.