R. Shermer & Company

Oil & Gas Held Separate Trustee


As a requirement of the proposed merger of two major downstream oil & gas companies, the FTC mandated the divestiture of a large refinery and a number of company operated retail sites.  R. Shermer & Company was appointed by both federal and state regulators as the Held Separate Trustee with oversight responsibility for the operations of the divested businesses during the period comprising the offering, buyer selection, due diligence, and transition planning processes.


The divested units were to be operated and managed as a Held Separate Business (HSB), independent of their parent company until sold.  The HSB was not considered a legal entity but was to be treated as a competitor of the newly merged -companies.  The Trustee's principal goals were to maintain the viability and competitiveness of the business and to prevent harm to competition pending the sale to the ultimate purchaser.  In addition, the trustee ensured that a "business-as-usual" operating approach was taken.


The role of the trustee was two dimensional.  On the one hand, the team monitored both the competitive environment and the performance of the assets being divested.  In addition, the monitoring role included confidentiality compliance and transition planning activities. On the other hand, managing largely through the HSB Manager, the Trustee provided direction and leadership to the day-to-day running of the business.  Analogous to the Board of Directors, the Trustee worked closely with the management team to ensure the successfull operation of the divested assets as segregated business units.  In addition, the Trustee ensured that HSB management and staff were not involved in the production, distribution, sales, marketing, and financial operations of the parent company.  Once the eventual buyer was selected, the Trustee also monitored the access of personnel and the flow of information between the parties to assure that no commercially sensitive information was shared.


  1. Working with management of the HSB to assure that the focus was on "long term" competitiveness
  2. Monitoring financial and operating results to ensure that business viability was maintained
  3. Developing policies and procedures to satisfy requirements for the separation of business operations
  4. Developing guidelines and recommending solutions to separate the electronic flow of information
  5. Addressing employee issues to assure a smooth transition
  6. Facilitating communication between all parties
  7. Reviewing the Transition Services Agreements involving the transfer of assets
  8. Reviewing the planning involved in the information technology transition
  9. Tracking of the issues raised during the transaction to assure timely resolution
  10. Reporting to the federal and state regulatory agencies involved in the transaction


The Trustee was an independent party selected by the seller and appointed by the FTC and the state agencies involved.  With functional experience in finance, operations, retail marketing, and information technology, the Trustee was well positioned to support both the refinery and retail locations during this period.  When asked about the principal benefits of having a trustee in place during these types of transactions, representatives of the companies involved had the following comments:

  • "The trustee assured that there was communication between the government agencies, the buyer, the seller, and the employees of the HSB"
  • "Played the role of referee very effectively and helped resolve a number of issues"
  • "Looked after the people in the HSB when it appeared no one else was interested in the many issues that individuals have as they tranfer to a new company's benefit programs"
  • "The trustee team has really helped all involved understand the complexities of our business, the competitive environment and the transaction"