 |
 |
Context / Scope of project
PIP was asked by an Australian Private Equity firm to conduct a strategic review of a proposed acquisition in a specific part of the marine services market. The target company was privately run and had grown its revenue base 7-fold in the last 2 years to $100m. It was heavily dependent on its founder and majority shareholder for growth, and had grown so quickly that its internal accounting systems had not kept up with the overall development pace, thereby placing under scrutiny the earnings projection on which the deal was valued.
Key insights:
- This specific marine services market will grow tremendously over the period 2011-2016 on the back of significant capital expansions in in Western Australia (even in the advent of a second GFC-style economic slowdown)
- There are no dominant players in a market of relatively unsophisticated providers, implying a large opportunity for any player that applies a more professional approach to market development
- The keys to growth in the specific marine services market are: being able to provide services from a local location; deep knowledge of local marine conditions; providing a 'one-stop shop' of the specific marine services, and good 'key account management' style development of large EPCM and mining house customers.
Outcome:
- The client chose not to pursue the acquisition, on account of the fact that the initial revenue forecast for FY 2010 was not going to be met
- However, the client remains interested in the target and will review its decision in 6 months' time.
|
|
|
|
|
What we did:
- Defined and structured the specific market served by the target , including identification of value propositions, customer value chains, and product offerings
- Interviewed 25 key customers (EPCMs and Port Authorities) as well as key competitors (in disguised form)
- Created a 5-year estimate for target company's revenue projection:
• Split into Project vs Recurring, where project revenue relates to capital projects, and recurring relates to ongoing maintenance contracts
• Split by product line (i.e. type of task, type of equipment, repair & refitting)
• Flexed against 6 scenarios reflecting both the level of expected investment in this specific market and also the potential market share of the target
- Developed recommendations and organisational assessment of management, processes, systems, resourcing, and governing principles which the target needed to address in order to secure the projected future revenue.
|
|
|
|
