Written on: June 9, 2026
By Jeffrey Simpson, Notch Capital
With two solid winters in a row under our belts and a larger, more diverse pool of buyers and investors in the market, we’re potentially entering the most opportunity-rich environment that propane companies have seen in some time.
Whether you’re looking to sell your business, acquire a competitor or inject more capital into your operation to spur growth, there could be plenty of avenues to accomplish it — provided you have funding ready to get the deal accomplished.
I’ve been working in the propane sector for decades, and lack of funding is one of the most common M&A deal-killers. Securing capital from traditional banks can be a nonstarter because of more stringent lending requirements. However, today’s environment has more capital options than many business leaders realize.
Refinancing versus Recapitalization
Refinancing is probably the most familiar option for any business owner with an established banking relationship. It involves replacing existing debt with new debt on better terms. Refinancing can improve your amortization schedule, lower your interest rate or add debt capacity to support growth without overburdening the business. On the other hand, the extent of your financial benefit from refinancing will be limited by bank lending guidelines.
Which brings us to recapitalization (or a “recap”). This strategic option typically introduces a combination of new debt and equity to support a specific growth objective or ownership transition. Recaps are often used to fund acquisitions, expand a business line, improve leverage or buy out a partner or family member.
If you’re in a mid-career position, a recap can provide capital for meaningful growth without going it alone. For owners nearing retirement, it can create liquidity while allowing them to remain involved until they are ready to step away.
Where the Capital Comes From
As we’ve alluded to already, banks are highly regulated and have lending limitations that can quickly max out the available credit for many lower middle market businesses, including many local propane providers. If your annual Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) falls below $2 million, the traditional bank refinancing route is often the most advantageous for smaller companies and those with service divisions.
Now for the good news. Private capital groups, family offices and industry-focused investors are actively seeking propane companies with stable customer bases and recurring revenue to invest in, so options are expanding for those with EBITDA above $2 million. The best partners take a long-term approach, allowing existing management teams to remain in place after a transaction. These investors value the dependable demand, essential-service nature and growth potential that characterize successful propane businesses.
What Bringing on a Capital Partner Means
Taking the pathway to recapitalization comes with a lot of deal flexibility and growth opportunities, but it also means you will be answerable to your capital partner. They will want regular, accurate financial reports and a robust management team. They may insist on board representation or that they be consulted on key business decisions such as new financing and key acquisitions. As you might imagine, the larger the investment, the more control the partner could request.
Before settling on a financial or investment partner with whom you could have many years of collaboration — and potentially conflict — it’s important to explore multiple options and find one that aligns with your goals and management style.
For propane companies exploring their next chapters, the traditional options (selling to a competitor, passing the business to the next generation) are no longer the only ones available. Today, a wider range of financing options gives owners more flexibility than ever. Whether you’re planning an acquisition, funding expansion or preparing for succession, there are numerous paths available. The capital is there for propane marketers ready to pursue new opportunities and invest in their future growth. Still, you need to be conscientious and pragmatic as you explore your choices.
Jeff Simpson is the founder and managing member of Notch Capital, a private investment firm specializing in buyouts and recapitalizations of lower middle market businesses in the propane and home services industries. Notch Capital also provides advisory services to help these businesses strengthen their performance and analyze acquisitions.
