The Asset Management company wanted to provide a purchase price and asked PH Global Advisor to analyse the different valuation methods and provide with a recommendation.
The different steps consisted of:
- Gather all information available
- Test its reliability
- Provide a detailed ID card of the company
- Analyse the Assets in terms of provenance, age, types of contract
- Analyse the customers in terms of concentration and average scoring risk
- Analyse the different components of the revenue and provide for each one a value
- Calculate the Net Book Value of the equipment and its Fair Value
- Analyse the different components of the debts attached to the equipment
- For the ancillary segments, provide a value using the EBITDA method (benchmarked with competitors)
- Analyse the revenue stream of each segment
- Provide solid assumptions on Utilisation, renewal and deflation
- Provide value of the revenue stream with a discount rate (benchmarked)
- Calculate the liquidation value
- Highlight red flags in financials and operations
- Provide with a reasonable range of valuation using different methods
As a result:
The in-depth research on all aspects of the company and its Assets was a background document for the negotiation.
The Asset management company acquired its smaller competitor at a reasonable price. Both companies are operating.
Management of the acquired company improved with the help of the identification of red flags by PH Global Advisor