$250 Million Oil Take-Over Deal Implodes Due To Disastrous Data Management

As professionals in the oil and gas sector we all know that when it comes to a merger and acquisition (M&A) that having access to quality data is essential. In its absence deals don’t get made, investors lose $000,000s and livelihoods are put at risk.

So we were pretty taken aback recently to hear of one deal – of a public company – which fell through because the organization couldn’t even list their complete assets with confidence – such was the mess of their data.

We were talking with a CEO recently who “vented” about a recently failed acquisition.  He is a major player who has worked in the sector since the mid-1970s, he told us here why the $150 Million to $250 million investment his company was prepared to make didn’t just fall flat, but imploded:  “Despite asking this company repeatedly to give us access to their “complete” data sets they failed to deliver time and again. We became increasingly frustrated and discouraged to the extent we wouldn’t even make a proposal in the region of $80 million for the company.  What was so galling to us was that it was obvious this company badly needed an investor and had approached us to bid”

We all know what data is needed for M&A investments to happen, some of which we can get from public records and from commercial organizations such as I.H.S and Drilling Info (in the USA). But those sources alone are not nearly sufficient. So what were they thinking? Did they think data would take care of itself? Or was someone just not doing his/her job well?

The CEO continues “…. in the past when companies were under pressure, typically a lot of data got swept under the rug as it were. Today though, investors demand tighter regulation of data and I suspect that, because of this, in ten years’ time some companies just aren’t going to make it. If our company had been allowed to invest and take over we could have solved many of the organization’s problems, saved some jobs and even added value. Sadly, in this event, due to poor management of critical data that scenario was never allowed to take place. The deal never even got past the first hurdle. No-one is going to invest $millions when they don’t have a clue of (or confidence in the data of) what they’re buying.”

Considering this was a company which had a responsibility for public money the management team should never have been allowed free rein without critical data management regulations or at the very least “guidelines”.

What is your opinion?

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