May 2013

Dallas Business Journal Page 1

In energy, it’s eat or be eaten

Nicholas Sakelaris

Staff Writer-Dallas Business Journal

The energy boom has kept the folks at

Allegiance Capital Corp. very busy with

mergers, acquisitions and other transactions.

I spoke with founder and chairman David

Mahmood recently about how the shale

revolution has changed the investment

banking industry.

Oil and gas is viewed as a safer bet than in

previous years because of hydraulic fracturing

becoming widespread across the country.

He’s also seen a huge increase in M&A

activity.

In other words, if you’re an energy company,

it’s “eat or be eaten,” Mahmood said.

“The energy revolution in the United States is

going to go on for a good many years,”

Mahmood said. “Nothing lasts forever but, you

know, compared to the boom and bust of the

oil cycles, buyers today see it as a sustainable

industry less prone to the wild swings of the

past.”

What drives energy M&A?

1. The owner has reached retirement age.

2. A smaller company that provides services

to larger companies gets swallowed up by one

company, giving that company control of that

service while forcing competitors to go

elsewhere for that service.

3. A private equity firm purchases a share of

the company with an eye on selling the

investment for a healthy return.

David Mahmood – Founder/Chairman

Allegiance Capital Corporation

4. Technology transfer

International tech transfer

Other countries are realizing they have

potential shale plays, too, and they want the

technology that’s been perfected here in the

Barnett Shale to work for them.

One of the best examples is South Korea.

Allegiance has a representative there who can

speak on the company’s behalf.

“He can go show the major national oil

companies in Korea that he legally represents

Allegiance Capital and will bring buyers to us,”

Mahmood said. “You can hire people or you

can buy companies that are actually doing it.

You can send your engineers over. You can

learn. While you have a profit-making

business that is performing well you also have

the benefit of a technology transfer.”