The Challenge

The owner of a family-owned steel fabrication business, Mr Lim, was not sure of the value of his business. Prior to our meeting, he had an impression his business was worth under S$10 million. The value was derived in a standardised valuation report using an online automated valuation software. The provider does not offer sellside advisory services.

Strategix Asia’s Role

Strategix Asia carried out a ValuReady exercise for Mr Lim, which is our pricing review conducted before any decision to go to market. We analysed the company’s financial performance, revenue drivers, customer and supplier profiles to gain a better understanding of the intricacies of the business. Armed with this knowledge, we were able to benchmark the business against suitable market comparables and point out reasons for valuation gaps such as geographic scale, level of supply chain integration as well as revenue and EBITDA size.

Outcome / Current Status

As a result of these analyses, Strategix Asia was able to advise on the true worth of his business of at least S$15 million, which was markedly different from the value reported by the automated valuation software.

Additionally, we also pointed out reasons for gaps in price between larger regional competitors and itself. Mr Lim acknowledged these gaps and chose to defer the sale to the future, whilst choosing to act on our identified gaps to grow the business.

Key Takeaway

A successful sale requires planning years in advance so that owners can receive informed advice over their business value through a proper pricing exercise before deciding their next best course of action, with Strategix Asia alongside them in various pathways.