Wireline Issue 45 - Summer 2019

"We have some specific examples where a small technical team that’s focused and understands what it’s trying to do can demonstrate to the big boys that improvements can be made."

Exit signs As Wood Mackenzie’s analysis suggests, the recent spike inM&A activity has largely been driven by an influx of private equity. This trend is expected to continue in 2019 as majors and even larger PE-backed buyers spin off pieces of their portfolios to independents or other PE-backed companies, according to a recent update from law firm CMS. Perhaps inevitably, much of the concern around the influence of PE hangs over the question of what will happen when fund managers look to exit their investments. Although the routes for doing so are well established – either a trade sale, a flotation or merger, or potentially a combination of all three – PE-backed companies often face greater scrutiny over the potential for sales or acquisitions than their independent rivals.

For those at the helm of Verus, Neptune and Zennor such speculation is largely par for the course, but the prospect of an equity exit also helps guide their teams in how to build these businesses. All three executives spoke of the focus provided by this mindset, given that every strategic decision will inform how the business looks in five or ten years’ time. “[PE funds] are always mindful about what they are creating,” adds Alan, “Because eventually they are always looking to crystallise their investment and reinvest in something else – but the oil and gas company doesn’t go away. It’s about creating successful, sustainable businesses that will go on to support the delivery of MER and ultimately increase revenues for the country, beyond a private equity exit.” For Zennor, the direction is clearer still. “Private equity is fairly ubiquitous in that it’s nearly always

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