The Transaction Advisory experts at FTI Consulting and its subsidiary, Compass Lexecon are senior partners and dedicated teams with specific wholesale energy industry expertise — offer a forward-looking perspective and track record of success across the entire transaction life cycle. Whether representing buyers, sellers or lenders, we offer comprehensive due diligence advice and hands-on support in evaluating opportunities across the risk/return spectrum. We help wholesale energy clients assess future energy demand, energy prices, cash flows and asset values.
Our Service Offerings
For public and private companies in the wholesale energy industry, FTI Consulting and its subsidiary, Compass Lexecon professionals have performed asset valuations for numerous purposes, including fair market value, fairness opinions, purchase price allocations, impairment testing, dispute resolution, transaction analysis and pricing, and restructuring. Asset valuation is simply valuing the asset on the basis of all the due diligence you’ve undertaken and all the estimations of forward future cash flows to allow you to value an asset. And the asset of future cash flow is usually the function of what the regulations are going to be, what the market conditions are going to be, and other issues such as your future cost profile.
Financial Due Diligence
Wholesale energy companies face transaction opportunities and challenges across the entire risk/return spectrum. Most are inexperienced and ill-equipped to understand or manage the demands of these opportunities or transactions. FTI Consulting and its subsidiary, Compass Lexecon professionals are well-placed to lead our clients, buyers, sellers and lenders, through an entire transaction life cycle — offering comprehensive financial due diligence advice and hands-on support, including quality of earnings analysis, underlying working capital and net debt profile, forecast sensitivity analysis, and SPA advice to name a few. The result is that our clients complete transactions that are sound and sustainable.
Commercial Due Diligence
Commercial due diligence analyses network assets on the basis of markets served, competitors, market shares, regulations, pricing policies, revenue, profitability and how they all are likely to change in the future. FTI Consulting and its subsidiary, Compass Lexecon are well-versed in conducting commercial due diligence. If you are buying or selling power stations, for example, our energy professionals provide power price forecasts of what the markets will pay for electricity in the future using FTI proprietary models, what it will cost to generate that electricity, how the regulatory landscape is likely to change and what you might expect in revenues and profit.
Regulatory & Risk Assessment
FTI Consulting and its subsidiary, Compass Lexecon work in partnership with our clients to manage business challenges, specifically those imposed by a demanding and changing regulatory environment. We typically get involved when a client needs to respond to regulatory information requests; needs to prepare for a regulator visit, when a skilled person review is required; when a risk assessment is required; and when a business model or management change is occurring. Our expertise runs across the full spectrum of regulatory issues including business model analysis, corporate governance, risk and regulatory management, wholesale and retail conduct risk management, compliance programmes and financial crime. We encourage clients to identify and address issues proactively to enable them to remain in control of their regulatory issues, thereby avoiding unnecessary costs and senior management distractions caused by direct regulatory intervention.
In order to effectively compete, either in existing markets with new and/or existing products, or in new markets with new and/or existing products, wholesale energy companies must have a clear understanding regarding all facets of their competition. FTI Consulting and its subsidiary, Compass Lexecon professionals provide critical research and fact-based intelligence regarding market characteristics, competitor profiles, customer profiles, products, pricing and profitability estimates, success/failure profiles, etc. Equipped with this actionable information, that supports executive planning and decision-making, we help clients develop business plans that enable them to compete more effectively against the strengths and weaknesses of competitors.
As a potential buyer or seller of a network asset, bidding is key to achieving a successful outcome. Many companies are not as adept as they should be in making an offer and supporting it. Beyond the obligatory regulatory and commercial due diligence, FTI Consulting and its subsidiary, Compass Lexecon professionals can provide sophisticated financial modelling, writing a business plan, writing papers enlisting the support of the board of directors, etc., that provide our clients with sound, well supported buy or sell financial guidance.